Merpati and Garuda to split soon

Merpati and Garuda to split soon

JAKARTA (JP): The separation of Merpati Nusantara Airlines
from its parent company, Garuda Indonesia, is expected to be
completed by the government later this year.

The documents for the separation have been submitted to the
State Secretariat and are now awaiting approval from President
Soeharto, Minister of Transportation Haryanto Dhanutirto told
reporters yesterday after swearing in new officials at his
office.

In late 1993, the government announced that it would separate
Merpati from Garuda to boost the performances of the airlines.
The division has been held up by problems even though the
Ministry of Finance -- the government's nominee shareholder in
Garuda -- had approved the plan about two years ago.

Differences in the asset inventories of the airlines had
caused some of the problems. The two airlines had reportedly
claimed millions of dollars in credits against each other; many
of the claims overlapped.

Merpati operates 85 aging aircraft including Boeing B-737-
200s, Fokker F-100s, F-28s, F-27s, ATPs, Casas, Twin Otters and
CN-235s, which were built by the state-owned Industri Pesawat
Terbang Nusantara. The company plans to operate several Airbus A-
310-300 aircraft on its new Jakarta-Melbourne route later this
month.

Of the aircraft, there are 17 aging F-28s, 14 CN-235s and 11
Twin Otters that have been accounted for as government equity in
Merpati.

Merpati, which serves mostly feeder routes, has not performed
well financially, partly because it is the only carrier assigned
by the government to serve pioneering, uncommercial routes in
remote areas.

Early this year, the airline reported that its losses last
year had increased to Rp 93.12 billion (US$39.6 million) from Rp
88.93 billion in 1994. It expects to reduce its losses to Rp
63.74 billion this year.

Garuda operates 59 jets, including Boeing, Airbus and
McDonnell Douglas jetliners, for its regional and international
routes.

Leabilities

Under its ongoing restructuring program, Garuda plans to sell
some of its star-rated hotels to improve its finances. Since the
late 1980s, the company has been trying to reduce its liabilities
which run to hundreds of millions of dollars.

The government recently agreed to take on Garuda's debts of up
to Rp 1.6 trillion ($681.43 million), which it incurred when it
bought nine Boeing aircraft. The government wanted to improve the
company's financial structure before listing its shares on the
stock market in 1998.

Haryanto installed 19 officials yesterday. They included the
heads of the new directorates set up within the Directorate
General of Land Transportation and the Directorate General of Sea
Transportation.

Under a decree signed by President Soeharto on June 6, the two
directorate generals have been realigned to improve their
functional efficiency.

The Directorate General of Land Transportation now has four
directorates in charge of street traffic, railroad traffic, river
and lake crossings and city transportation.

The Directorate General of Sea Transportation has had its six
directorates reduced to five.

"The directorate of maritime services has been eliminated and
its activities will be handled by the Ministry of Industry and
Trade," Haryanto said. (icn)