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)