Airport operators plan IPOs to sell government stake

JAKARTA (JP): State-owned airport management companies Angkasa Pura I and Angkasa Pura II plan to sell a portion of their shares to the public as part of the government's privatization program, executives of the two companies confirmed on Tuesday.

President of Angkasa Pura II Miskul Firdaus said selling the shares through an initial public offering (IPO) was one of new approaches taken by the office of the State Minister for the Empowerment of State Enterprises in a bid to speed up the privatization program.

He declined, however, to comment on whether the government's plan to hold the IPO would annul the bidding process held earlier to choose a strategic foreign investor for one of Angkasa Pura II's properties, the Jakarta Sukarno-Hatta International Airport.

"That is the government's business... Personally, we think an IPO is a better alternative for fund raising than a direct placement," Miskul told journalists after a hearing with the House of Representatives' Commission IV for transportation and infrastructures.

Angkasa Pura II currently manages nine airports in western Indonesia, including Sukarno-Hatta and Halim Perdanakusuma in Jakarta and Polonia in Medan, North Sumatra.

The company reported a pretax income of Rp 287 billion (US$39.3 million) in 1999, down from Rp 916 billion in 1998 and Rp 389 billion in 1997.

The government opened a tender last year to find a foreign strategic investor to manage and operate the Sukarno-Hatta International Airport in Jakarta.

The winner of the tender will buy almost 50 percent of the government's stake at the Sukarno-Hatta Airport and manage most of the aeronautical and non-aeronautical services, excluding the air traffic control system, briefing offices and navigation- related services.

The government initially planned to announce the winner of the bidding in December last year.

Reports said that the delay in concluding the bidding, involving the French Aeroport de Paris and a consortium of Dutch Schiphol Airport management and the British Port Authority, was partly due to price negotiations.

Miskul said a target date has not been set nor the proportion of stakes to be sold in the planned IPO. "We were only informed of the plan last week," he added.

Gatot Pudjo Martono, the president of Angkasa Pura I, said that unlike Angkasa Pura II, his company had been informed about the government's plan for IPO and undertaken some internal studies since 1997.

However, he said, Angkasa Pura I was not really in favor of the IPO plan.

"We are not sure whether it will benefit us in the long term... Besides, political and business climates in the country are still unstable, we are afraid that will discourage investors," he said.

He said the company considered its financial condition to be fragile still as a result of the country's political condition.

Angkasa Pura I reported a pretax income of Rp 324 billion in 1997 and Rp 801 billion on 1998. The 1999's results are still being calculated, he said.

Data from Angkasa Pura I showed a decline in the air traffic at all 13 airports since 1997, in line with the escalating political and economic crisis. The number of passengers traveling to and from the 13 airports declined from 17 million in 1997 to 11 million in 1998 and 9.9 million in 1999. The volume of cargo being loaded and unloaded also dropped from 199,992 tons in 1997 to 172,326 tons in 1998 and 158,019 in 1999.

Gatot said the unstable political and economic conditions had affected the workload at most of the airports.

Only three airports in the Angkasa Pura I's region, namely the Ngurah Rai in Bali, Juanda in Surabaya, East Java and Hasanuddin in Makasar, South Sulawesi, had performed well and generated income in 1999, he said.

Gatot said it would be better for the government to delay the IPO planned for Angkasa Pura I -- which manages 13 airports in the eastern part of Indonesia, including Ngurah Rai in Bali, Sam Ratulangi in Manado, North Sulawesi; Frans Kaisiepo in Biak, Irian Jaya; Selaparang in Lombok; and Pattimura in Ambon -- until economic and political stability returned.

He also called on the government to cancel its recent plan to form a new, separate, state-owned company to manage the Air Traffic Service (ATS) at all the country's airports.

Angkasa Pura II's Miskul shared Gatot's view, adding that ATS was a major contributor to the company's earnings. "We are going to lose up to 35 percent of our income if we have to relinquish the ATS section," he said.

Miskul, however, said that Angkasa Pura II still preferred the government to proceed immediately with the IPO.

"The sooner the better. Our company is ready for it. If you ask me, I'd say we should do it this year," he said. (cst)