Garuda may be remerged with Merpati: Tanri
JAKARTA (JP): The country's flagship carrier Garuda Indonesia may be remerged with its former subsidiary, state-owned airline Merpati Nusantara, in an effort to prevent the latter from going bankrupt, according to a government official.
State Minister of the Empowerment of State Enterprises Tanri Abeng said that a team was still discussing ways to prevent the demise of Merpati, which traditionaly flies on low-demand routes but has a key role in providing a fast means of transportation to connect the remoter parts of the vast archipelago.
"Merpati won't be liquidated. One alternative is to merge it with Garuda," he told reporters yesterday after a meeting with several economic ministers.
Merpati was a subsidiary of Garuda Indonesia before the government separated the two airlines' operations in 1995.
As an independent company Merpati has not been able to make a profit, posting net losses of Rp 130 billion in 1995 and Rp 133 billion in 1996. The deficit soared to Rp 248 billion in 1997 due to the collapse of the rupiah against the U.S. dollar.
The plunge in the value of the rupiah against the U.S. dollar is expected to create an even larger loss this year as the company's rupiah revenue cannot cover its operating costs which are 70 percent based in U.S. dollars.
The currency crisis has also cut its load factor by more than 50 percent as the fall in the rupiah has meant many Indonesians can no longer afford to travel by airplane.
In a cost-saving measures, Merpati returned 19 of its foreign- leased airplanes in June, including five Airbus 310s.
The monthly leasing cost for each Airbus was about US$420,000.
Merpati currently has 61 airplanes, 36 of which the company owns, and 25 which are leased.
The country's five schedulled airlines announced in June plans to embark on a pooling system by combining their resources to survive the crisis. This has yet to be realized.
A week earlier, the sixth airline, Sempati Air, decided to cease operations following the 80 percent drop in the value of the rupiah.
Selling planes
Garuda president Robby Djohan said yesterday that the airline had decided to sell five airplanes and its $300 million maintenance facility unit at Soekarno-Hatta International Airport as part of cost-saving measures to survive the crisis.
He was also quoted by Antara as saying that the company planned to streamline its workforce.
The ideal ratio of employees to an aircraft was 167 to one, compared the current 273 to each airplane, he said.
Garuda currently operates 50 aircraft.
Robby also said the company had managed to restructured $285 billion in overseas debt that was due to mature this year into a five-year maturity.
The company has a total overseas debts of $400 billion.
The airline last month stopped several overseas routes and returned several leased aircraft to save costs.
"All these steps have been taken in a bid to privatize Garuda next year, either through the capital market, or with the entry of new investors," he said. (rei)