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Oh Captain, My Captain

Merpati Nusantara Management Members Resign Over Controversial Firing of CEO

Bali News: Indonesia, Merpati Nusantara Airlines, Rudi Setyopurnomo, CEO, Sardjono Jhonny Tjitrokusumo, Jhonny Sardjono, Minister of State-owned Enterprises, BUMN, senior vice president for corporate planning, Merpati. Erry Wardhana, resignation, financial synergy, financial losses, Dahlan Iskan, funding, state budget
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(5/18/2012) reports that the firing of the CEO of Merpati Nusantara Airlines by the Minister of State-owned Enterprises (BUMN) precipitated the resignation of a number of upper management members at the government-owned airline.

Protesting that the termination of Sardjono Jhonny Tjitrokusumo (Jhonny Sardjono) was not done in accordance with the law, the senior vice president for corporate planning at Merpati, Erry Wardhana, told Bisnis on May 14, 2012: “I, and around 8 people at my level of the company, have handed their letters of resignation to the new CEO. I hold an official receipt (for the resignation).”

Wardhana said the process of firing Sardjono, which was not in accordance with agreed procedures, prompted his resignation. Moreover, he complained that the reason for the termination has not been made clear.

“Captain Jhonny was not given the right to defend himself in an open forum before the BUMN Ministry, despite such a forum being scheduled for May 21, 2012,” said Wardhana.

The former SVP of Merpati said that Captain Jhonny received a letter advising of his replacement on Monday, May 7, 2012, which he was asked to counter-sign. That letter granted the dismissed CEO 14 days to respond to his firing. That deadline for that response fell on May 21, 2012.

Wardhana continued: “This was in keeping with the rules. What’s more, I prepared a response for Captain Jhonny for him to read on May 21, 2012. But, heh, on Friday night, May 11, 2012, another letter arrived ordering him (Captain Jhonny) to hand over his position as CEO on May 14, 2012.”

In Erry’s view, the airline’s management is capable of answering the accusations made against Captain Johnny as the basis of his firing, namely issues related to a lack of financial synergy.

Sardjono Jhonny regretted the process of his sudden replacement. Adding: “It will be regrettable if the baton in the next leg of relay race falls to the wrong hand. I am also unhappy if the BUMN Minister claims I resigned because the financial synergy of Merpati showed no signs of improvement.”

Jhonny admitted that he had expressed his intent to resign on January 30, 2012, in connection with a refused request for additional working capital from the government. “I was forbidden from adding Rp. 200 billion in state funds as working capital in the Company’s Working Budget for 2012,” he explained.

However, Jhonny said that in February 2012 all the employees of Merpati gathered at the Bank Mandiri Building. “There, Dahlan Iskan, the BUMN Minister, refused my resignation as CEO. This clearly underlines that my resignation was refused and rendered null and void, so I continued with my assignment,” said Jhonny.

The dismissed CEO told the press that during his appointment as CEO on May 26, 2010 until December 30, 2011, he had never received supporting funds for the airline from the government. At the time of his employment, Merpati only had five aircraft.

“How can the restructuring and revitalization (of the airline) go forward without funding? During the subject period is was already an achievement that Merpati managed to survive,” Sardjono complained.

The interim CEO of PT Merpati Nusantara Airlines, Rudi Setyopurnomo, who previously served as Chief Commissioner of the airline, said Jhonny was replaced because of the poor financial synergy within the company.

“In 2011 the company lost Rp. 750 billion (US$81.5 million), while in the first quarter of 2012 the company lost a further Rp. 250 billion (US$27.3 million),” said Rudi.

He estimated that the bad financial synergy of Merpati is due to the poor management of the airline’s operations. He cited the thrice-weekly flight service between Jakarta and Bandung. That flight is operated with a plane with 56 seats, but according to Rudi, only four seats are filled and, moreover, the service has flown on occasion without any passengers at all.

“This has to be addressed. The load factor is zero, but the route is still flown, not to mention other (similar) routes. This clearly results in the corporation losing Rp. 2 – 3 billion every day,” Rudi added.

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