Merpati books Rp 97.7 billion in profit after two years in red

SURABAYA (JP): State-owned domestic air carrier PT Merpati Nusantara Airlines booked a pretax profit of Rp 97.9 billion (US$12.3 million) last year, a turnaround from a net loss position in the previous two years.

The airline's president Wahyu Hidayat said Merpati was previously in the red with a net loss of Rp 653.3 billion in 1998 and Rp 417.7 billion in 1997.

"Merpati is still alive. We are improving. We are ready to compete," he said during a ceremony to mark the awarding of the ISO 9002 certificate for the airline's maintenance facility from Sucofindo International Certification Services.

He said the higher profits were due to an improvement in the airline's operation and the rescheduling of the airline's debts.

Merpati has suffered financial problems for several years with declining income and increasing expenses.

The weakening of the rupiah against the U.S dollar during the economic crisis has further burdened the airline as its rupiah earnings have failed to cover its dollar-based operational costs.

In order to cut costs, the airline was forced to reduce its fleet from around 90 aircraft in the precrisis period down to 29 in 1999, while flight frequency dropped from 344 flights to 270.

The reduction of fleet capacity has affected the airline's load factor, causing it to fall below 40 percent. Revenues dropped to around Rp 70 billion per month during 1998 and part of 1999.

Merpati began to see signs of recovery in the second half of last year. The load factor rebounded to over 70 percent.

The airline was also successful in restructuring at least Rp 700 billion of its total debts, Rp 1.7 trillion, with over 90 overseas and local creditors, most of whom were vendors, leasing companies, repair centers and maintenance support providers.

He said the airline was still working on the restructuring program of its debts to local business partners, the state owned air carrier PT Garuda Indonesia Airways and aircraft manufacturer IPTN.

Merpati owed Garuda some $20 million for aircraft leases and maintenance and $10 million for aircraft leases to IPTN, he said.

Wahyu said the payment of debts to Garuda would be finished within eight years, while debts to IPTN would be covered partly by returning two of the 14 CN-235 aircraft that have been so far leased from IPTN.

Wahyu said the airline was striving to improve its financial condition and service performance as part of its efforts to obtain the government's license to provide air transportation to haj pilgrims going to Mecca.

Merpati has improved its service performance, including its on time performance which has increased to 85 percent from 80 percent previously, he said.

"With all the improvements, I think Merpati deserves to get the license. We hope the government will eventually award us the license so that haj air transportation services shall not forever be monopolized by Garuda," he said.

Merpati expects to expand its service this year by reopening the Jakarta-Bandung route, and establish new services to cities in the eastern part of the country like Kupang and Maluku.

In order to support the expansion plan, Merpati will increase its fleet to 42 aircraft. There are 35 aircraft at present, he said. (nur/cst)