Merpati expected to break even after big losses

Merpati expected to break even after big losses

JAKARTA (JP): The money-losing Merpati Nusantara Airlines is
expected to break even this year after splitting from its parent
company the national flag carrier Garuda Indonesia and getting
three former Garuda executives as new directors, a minister said
yesterday.

The separation, based on Government Regulation No 10/1997
dated April 29, 1997, is due to be completed in the next two
months, Minister of Transportation Haryanto Dhanutirto said.

"The last phase of the separation process to establish Merpati
as an independent state airline company is being sorted in a
series of shareholders' meetings," he said.

This is the first time the government has split a state-owned
company into two separate firms," he said after installing seven
top officials at his office here.

Plans for the separation began in late 1993 in a bid to
improve Merpati's performance, but the process was hindered by
asset ownership and other corporate problems.

In a separate ceremony at Garuda's headquarters earlier
yesterday, Garuda's president, Soepandi, installed Merpati's
three new directors, as part of the separation process.

Overlapping claims worth millions of dollars and differences
of opinion on asset inventories have reportedly been some of the
major hurdles to the separation.

Merpati faces a tough battle as it is known mainly as a
regional carrier that serves mostly domestic feeder routes and a
limited number of regional routes, including Singapore, Kuala
Lumpur and Melbourne.

As well as unprofitable routes, gross inefficiency has hurt
the 25 year-old Merpati because its fleet includes a variety of
airplanes.

The company currently operates 92 aircraft, A-310-300s, B-737-
200s, F-28s, F-27s, ATPs, Casa-212s, Twin Otters and CN-235s --
most are old.

Informed sources say Merpati's losses declined to Rp 130
billion (US$54 million) in 1996 from Rp 133 billion in 1995.

The company is also burdened with Rp 600 billion in debts
which it expects to be converted into new government equity
shares.

Soepandi yesterday installed Desmon Ismael as Merpati's new
financial director replacing Ishak Sumawiria.

Merpati's other new top executives are Indra Setiawan as the
director of commerce replacing Agus R.S. Santoso and Sunarko
Kuntjoro as the technical director replacing Mulyono.

Haryanto said the three new executives were former Garuda
employees. "They were selected by a special team."

Ismael, 42, was former head of Garuda's budgetary bureau.
Kuntjoro, 46, had worked with Garuda for 20 years and was
previously head of its computer division and Setiawan was
previously head of Garuda's marketing plan and development
division.

The seven officials installed by Haryanto yesterday afternoon
as his new staff experts included Purnomo Sidhi, Abdul Razak
Manan, Ismedsjar and Ishak Soemawiria.

P.P. Simatupang and Saad Ali Basaib were appointed members of
the boards of supervision (commissioners) of the state-owned
railway company Perumka and the state-owned bus operator Perum
Damri, respectively. Muchtar was installed as the new secretary
of the National Search and Rescue Agency. (icn)