Merpati decides not to lease CN-235 planes

Merpati decides not to lease CN-235 planes

JAKARTA (JP): Merpati Nusantara, the state-owned domestic air
carrier, has decided not to lease 16 CN-235 aircraft due to
unusually high operation costs which make IPTN's airplanes
commercially unviable.

"I have sent letters to the Ministry of Finance and the
Ministry of Transportation notifying that Merpati's financial
problems will worsen if we are forced to lease (through a third
party) each CN-235 aircraft at US$110,000 per month," the
company's president Ridwan Fatarudin told reporters here
yesterday.

He said that Merpati, which currently owns 14 CN-235-10s with
government equity participation, was asked by the government to
operate 16 CN-235-200s. The new generation CN-235 is manufactured
by the Bandung-based aerospace company and can be procured
through a leasing or a purchase arrangement.

"Instead of procuring or leasing the 16 CN-235-200s, we have
suggested that the government itself buy the aircraft and
transfer them to us as its new equity."

Minister of Transportation Haryanto Dhanutirto admitted last
week that he had intervened in the bargaining between Merpati and
PT Industri Pesawat Terbang Nusantara (IPTN) for the procurement
of 16 CN-235-200 aircraft.

"But Merpati had not made up its mind even though IPTN had
agreed to lower its selling price from $13 million to $9.2
million for each CN-235," Haryanto said last Friday.

Haryanto reaffirmed the government's political will in
supporting IPTN's products.

Ridwan said yesterday: "It's true that we have to support
IPTN's products, but we also have to take care of our financial
soundness."

"Even the CN-235-10 planes currently operated by Merpati have
been losing money. On the Jakarta-Bandung route, for instance, we
suffer a loss of Rp 406,000 (about $177) per flight. The total
loss may reach Rp 861,000 per flight if we operate CN-235-200 in
the same route," he said.

He said that his company is facing bigger losses on other
routes, such as the Jakarta-Cilacap route, due to fewer
passengers.

However, Minister Haryanto said that Merpati recently started
making a profit after operating each of its 13 CN-235-10s for
more than two hours per day.

But Merpati's Financial Director Sjarifudin Iteroedin denied
Haryanto's statement, saying: "Actually, we suffered a total loss
of Rp 19.7 million ($8.61 million) in the January-July period
because of the high operating costs of the CN-235-10.

Merpati, a subsidiary of the flag carrier Garuda Indonesia,
has frequently been criticized for bargaining for the CN-235s at
an "unbelievably low prices".

Merpati currently operates 84 aircraft of various types,
including; F-100s, DC-9s, F-28s, F-27s, CN-235s, ATPs, Casa-212s
and Twin Otters.

Ridwan said that Merpati's operating costs were high due to
the wide variety of aircraft it operates. (icn)