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 Lion Air Chief Dreams Of Runways And Roofs

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Join date : 2009-09-17

PostSubject: Lion Air Chief Dreams Of Runways And Roofs   Thu Feb 16, 2012 8:07 pm

Rusdi Kirana has dropped a record USD$22 billion on the table for Boeing jets and rubbed shoulders with President Barack Obama, but that's not even dinner conversation for the boss of Indonesia's Lion Air, who is obsessed with a far more modest project.

The former typewriter salesman, who wowed the Singapore Airshow by finalising the record order on Tuesday, is more anxious to discuss a plan to build homes for 4,000 workers that combines a paternalistic flair with hard airline economics.

"People can only afford to get a house that is too far away and then they have to pay for transport and there is a big problem in Indonesia with infrastructure," Kirana says.

"I am building new offices with houses next door. I say 'how much do you pay for transport each month?' They tell me and I say, 'OK pay that for the house then after 10 years it is yours'."

Kirana shot to global attention in November when his draft order for 230 Boeing passenger jets got high billing during a visit to the world's fourth most populous nation by Obama, anxious to play up the importance of US exports for jobs.

Kirana is still shopping for aircraft and was back at Asia's biggest aerospace show on Wednesday to pick up two Hawker Beechcraft business jets. He is also in talks with Airbus for possible future purchases of long-haul jets and is expanding deliveries of European ATR turbo-props.

Yet little is known about the 49-year-old and even less about his older brother Kusnan, with whom he started Indonesia's largest domestic and low-cost airline just over a decade ago.

That is despite Boeing, Western banks and even the US government having a stake in his success after Washington's ExIm export credit arm guaranteed an important slice of the Boeing deal. The White House has said the agreement will help to support more than 110,000 US aerospace jobs.

While Lion Air's recent moves have generated positive public relations, the company faces difficulties with its image. It has a reputation for delays and is banned by the European Union under a move originally applied to all Indonesian airlines over safety concerns, treatment Kirana calls unfair.

Lion Air has also taken a knock from a recent drugs scandal involving two pilots. The fallout is continuing, with the drugs agency suggesting many pilots could have problems. Kirana denies this and says he is working closely with the agency.

"It's the price of success. If you are Michael Jackson or Lady Gaga or Rusdi, there are a lot of rumours".

Lion Air has half the domestic market but to fulfil a dream of grabbing 60 percent it desperately needs more pilots and technicians, which is where it could gain from the housing plan.

In a rare interview, Kirana pulls out a camera phone and displays a drawing of the "Lion Air Village," which he plans to open next to Jakarta's airport in June. He says it will include dormitory accommodation for 3,000 people and 1,000 small homes.

Travelling to work on the nation's poorly developed infrastructure is difficult and unpredictable, one of the main reasons air travel is growing at 20 percent a year. Having staff living near work could mean fewer delays.

Kirana admits his 17,000 staff have little of the leverage seen at strike-prone Western airlines, but he talks animatedly about the social benefits of his accommodation plan.

"I am not a Socialist, but everybody has the right to buy a house and have access to hospital and school. They will get free school. They have to pay a small amount of money for books. This is what really excites me. I am less proud when standing next to President Obama than I am about this project."


Kirana's spectacular rise mirrors that of his country, which has so far mainly escaped fallout from Europe's debt crisis. Indonesia was forced to limp to the IMF for a bailout during the Asian crisis in the late 1990s, but has since built up its reserves and slashed debt and was rewarded in recent months by being returned to investment grade status by ratings agencies.

Kirana started out as a teenager selling "Brother" typewriters. His real-life brother put him through school. They set up a successful travel firm, then the airline in June 2000.

Three months later Rusdi Kirana flirted with the idea of selling for USD$1 million, but says his wife talked him out of it.

Today, the two brothers and co-owners have been contemplating floating the company for more than USD$1 billion, but postponed the offering due to choppy markets.

A person who has done business with Kirana says his avowed concern for people stuck in struggling conditions seems genuine. The housing plan is unusual for private firms in Indonesia, but not unknown for state companies or remote mining projects.

Meanwhile if the delayed flotation goes ahead, the low-cost airline will have to open up its tightly guarded finances.

"We don't like to show people a lot, we just want to work," Kirana told a small group of journalists. "You can call my bankers. They won't finance a company that isn't very good."

Bertrand Grabowski, the DVB director in charge of aviation, said the German bank had financed several aircraft for Lion Air and was "very impressed" with its growth so far.

Still, Kirana is a prime example of what one financier called "key man risk" -- CEOs who are so hands-on that there are fears over what would happen without them.

It's a feature Rusdi Kirana shares with his rival Tony Fernandes, the flamboyant CEO of Malaysia's AirAsia.

Both have the big plane makers falling at their feet, but act quite differently. Fernandes bathes in the limelight as a sports team owner and prolific Tweeter while Kirana rarely gives interviews, in which he speaks softly and confidingly.

"Our fight is in the market place," Kirana told reporters.

Asked why he outdid a blockbuster AirAsia order for one jet category by just one plane, he breaks into a dimpled grin and swishes a Figure 1 in the air: "Well you know, a bit of fun."



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