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)