Haryanto slams Merpati announcement

Haryanto slams Merpati announcement

JAKARTA (JP): Minister of Transportation Haryanto Dhanutirto
criticized yesterday a widely-publicized statement made by state-
owned Merpati Nusantara Airlines about its decision not to lease
16 locally-made CN-235 aircraft.

Haryanto told reporters after a meeting with Vice President
Try Sutrisno that the Merpati statement was premature because
negotiations about the lease were still underway.

Merpati president Ridwan Fataruddin announced on Tuesday that
the airline had decided not to lease the CN-235 aircraft because
the leasing fees asked were too high and the 14 CN-235s currently
in operation had been losing the airline money because of high
operation costs.

"We are still negotiating with several financial institutions
from Singapore, Japan and several other countries which offer
credit with interest rates of eight to ten percent," Haryanto
said.

He said it was a matter of regret that Merpati's management
had made the statement while negotiations about the proposed
financing packages were still underway.

Haryanto acknowledged that Merpati's debt is now equivalent to
11 times its capital.

"But Merpati's debts also represent liabilities of the
government," he added.

Ridwan said on Tuesday that Merpati had been a strong
supporter of the state-owned IPTN aerospace company in Bandung,
West Java, citing the IPTN products, such as the Casa-212 and the
CN-235, among its fleet of aircraft.

"But if we lease another 16 CN-235s at the offered fee of
US$110,000 per unit per month our financial losses will increase
sharply," Ridwan said.

He suggested instead that the government buy the 16 CN-235s
and transfer them to Merpati as new equity capital, as the
government had done with the 14 CN-235s currently in the Merpati
fleet.

Asked about government intervention in state companies,
Haryanto retorted: "You should not think that government agencies
are stupid and incompetent.

"We know which interventions are appropriate."

The minister added that the government wants to make Merpati
financially sound and to promote its healthy growth.

Haryanto affirmed yesterday that the government would not
raise land transportation tariffs before the end of this year.

"Neither will the government provide subsidies to
transportation companies because the era of subsidies has ended.
Even fertilizer for the farmers is no longer subsidized," he
said.

The minister was commenting on the request of transportation
companies, notably Jakarta bus operators, that bus fares be
raised by up to 130 percent to offset the rising costs of their
operations.

He said businesspeople should realize that profit margins in
the transportation business are small. "That is why the
management should be solid," he added.

Citing an example of management making a big difference,
Haryanto said one double-decker bus run by a private company in
Jakarta on a particular day had made only Rp 200,000 by 10:00
p.m., while a similar bus run by a state firm had made the same
sum by 4 p.m.

Haryanto said the tariff increase proposed by the
transportation companies was too high.

He said the government cares about the commercial soundness of
transportation companies but that such soundness should be
consistent with the interests of the public.(vin)