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Business

Garuda Indonesia replaces CEO after graft scandal, profit plunge

Flag carrier taps banking executive

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Pahala Mansury, Bank Mandiri’s director of finance and treasury, has been appointed the new chief executive of flag carrier Garuda Indonesia.   © Reuters

JAKARTA -- The Indonesian government on Wednesday announced the appointment of a new chief executive at Garuda Indonesia after a global graft scandal and plunging profits shook the flag carrier.

Pahala Mansury, currently a director at Bank Mandiri, Indonesia's largest lender by assets, will replace Arif Wibowo, who is leaving before the end of his five-year term.

The decision was made during Garuda's annual shareholders meeting on Wednesday. Wibowo's replacement follows the resignation of the president of Citilink, the airline's low-cost carrier unit, in January over a flight delay caused by a pilot alleged to have been drunk.

"Pahala Nugraha Mansury's experiences, particularly in financial and organizational restructuring, were a strong point in the considerations to appoint him as the president director of Garuda Indonesia," said Gatot Trihargo, a deputy to the state enterprise minister.

After swinging to a profit in 2015 and relaunching its global expansion plans, the airline was caught in a series of mishaps. Apart from the Citilink fiasco, Garuda's reputation has been eroded after a former president of the airline was named as a suspect in January in a multinational bribery scandal involving Rolls-Royce, the British aircraft engine maker. 

Adding to the airline's woes was a plunge in net profit in 2016, mainly due to a jump in aircraft leasing expenses. At a news conference in March, Wibowo argued that the expenses were necessary for realizing the expansion plans, which include increased flights to China and the opening of a new route to Mumbai. The expansion is also a key part of the Indonesian government's plans to boost its tourism industry.

Mansury joined Mandiri in 2003 and currently serves as the director of finance and treasury at the state-owned bank. He earned his master's in business administration from New York University's Stern School of Business and worked with some consulting companies, including The Boston Consulting Group, prior to his move to Mandiri.

The CEO replacement at Garuda came after a similar leadership change at state-owned oil and gas firm Pertamina, where Elia Massa Manik, a former head of a state-owned plantation company, was appointed the new CEO of Indonesia's largest company last month.

Some observers see crossovers of executives involving SOEs in different sectors as part of the government's efforts to improve coordination and integration among them.

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