Two of Asia's more prominent airline chiefs have discovered just how tough it is at the top. Garuda Indonesia's president Wage Mulyono and outspoken Philippine Airlines chairman Carlos Dominguez have both been ousted in the wake of boardroom infighting, disagreement over future directions and poor financial performances by their airlines.
Mulyono, who reportedly has health problems, stepped down as negotiations continued with Netherlands flag KLM on taking a major equity stake in Garuda. The airline will be partially privatised later this year and insiders confirm he clashed with the government over several key issues.
He had been attempting to dump old aircraft, modernise the fleet and restructure Garuda to make it more attractive to investors, but faced government opposition.
Dominguez' removal - he remains a member of PAL's board - took Manila by surprise, although it comes against a background of splits between himself and his successor, tycoon Lucio Tan, who owns 67 per cent of PAL.
But Dominguez refuses to fuel rumours of a new split. 'Competition is getting tough and it is not good to have a split in the PAL management. I will not let myself be a cause of another split; it is not good for the company,' he says.
In Jakarta, the official government line was that Mulyono 'had been due to retire a long time ago'. However, sources at the airline say his relations with the government have been deteriorating. Mulyono was unhappy over government interference in plans to cut the airline's debt through fleet restructuring and particularly the sale of eight Fokker F28s.
He was forced to sell to a consortium of three local companies, all owned by businessmen with strong government connections, including Tommy Suharto, son of the country's president. The plan is to lease on the aircraft to domestic airline Merpati Nusantara, but its officials say they don't even want them.
Differences emerged last year after the finance ministry refused to inject US$280 million into Garuda to meet aircraft acquisition debts. Mulyono then stated Garuda would part privatise through a share issue but the government barred any stockmarket listing until a major airline was found to take equity.
Talks have been going on with KLM since late last year and sources at Garuda hope agreement on an equity alliance will be finalised soon. Mulyono's replacement is the airline's personnel director Supandi.
In the Philippines, PAL executive vice-president Manolo Aquino said the changing of the guard was 'in line with the privatisation efforts PAL is undergoing currently.'
PAL's position is worsening. The airline lost 1 billion pesos ($40 million) from April to December last year, against a net loss of 495 million pesos for the fiscal year 1993-94.
PAL's position is worsening. The airline lost 1 billion pesos ($40 million) from April to December last year, against a net loss of 495 million pesos for the fiscal year 1993-94.
Source: Airline Business
