Airlines seek delay in jet lease payments

JAKARTA (JP): Indonesia's airlines are seeking a rescheduling of their jet leasing payments as the country's monetary crisis pinches deeper into their balance sheets, an airline executive said yesterday.

Soelarto Hadisumanto, chairman of the Indonesian Air Carriers Association, said Indonesian airlines had no better alternative but to propose the rescheduling of leasing payments.

He said lessors should at least offer a grace period to local airline companies to enable them to survive the crisis.

Airlines' financial capabilities were now too weak to pay their installments, he said, adding that in the current situation the airlines could afford only to pay 10 percent of their usual monthly installments.

"If the airlines were obliged to pay some US$100,000 per month per aircraft, the lessor should accept a payment of between $10,000 and $20,000," he said.

He also asked the government to subsidize airlines' installments by giving a special rupiah-dollar exchange rate. "If the government fixed the exchange rate at Rp 5,000 to the dollar, the remainder (of payments) could be paid in a 12-month period," Soelarto said.

Soelarto said the government should also help the association's members negotiate payment rescheduling with foreign lessors.

Director General of Air Transportation Zainuddin Sikado could play mediator to make arrangements with Indonesia's private- sector debt settlement team, he added.

The team, which was formed after the economic crisis struck and is headed by former economics minister Radius Prawiro, proposed a temporary halt in payment of overseas debts owed by the private sector to allow the debtors and lenders to renegotiate new deals.

Soelarto explained that because of the strategic role of the airline industry in providing fast transportation throughout the vast archipelago, the government should heed the call. He pointed out that such a facility had been provided for less strategic debt-ridden companies under Radius' authority.

According to Soelarto, five of Indonesia's six scheduled airlines, Garuda Indonesia, Merpati Nusantara, Sempati Air, Bouraq Airlines and Mandala Airlines leased many of their aircraft, and only Dirgantara Air Service operated with its own airplanes.

He added that several airplanes had been returned to their foreign lessors because of the difficulties in paying the installments.

Kompas daily reported Wednesday that Bouraq would return two of its nine Boeing 737 jets to Indigo, a Swedian lessor, by the end of this month.

Bouraq also leased Boeing jets from Forties Aviation and Trans Avia at an average of $105,000 per aircraft per month.

The plunge in the rupiah's value by over 70 percent against the U.S. dollar since early July last year has caused a sharp increase in airlines' operating costs, mostly in dollars.

Indonesia has been the most badly hit by the crisis, which started in Thailand in July. The rupiah at one time plunged to its lowest level of Rp 17,000 to the dollar compared to Rp 2,450 in July.

The rupiah remained high at 10,200 against the greenback yesterday.

The crisis has raised worries that domestic airlines may be heading toward collapse.

Domestic airlines, which have no overseas routes, are believed to be in serious danger of shutting down due to huge losses following the crisis.

A 35 percent increase in domestic airfares this year may further slash airline passenger volume.

Some airlines have reportedly stopped operating on unprofitable routes. (08)