Merpati fails to break even this year

Merpati fails to break even this year

JAKARTA (JP): State-owned air carrier Merpati Nusantara
Airlines, which has suffered from long-term financial troubles,
will not breakeven this year following the sharp depreciation of
the rupiah, the company's president said.

Budiarto Subroto said the local aviation industry was facing a
tough situation as most of the costs and expenditures were in
U.S. dollars, while the airfares would only be raised later this
year.

"It's impossible to breakeven this year," he said here
yesterday after awarding a number of travel agencies associated
with Merpati.

Merpati was previously set to breakeven this year after the
government separated last April the airline from its parent
company the national flag carrier Garuda Indonesia.

Minister of Transportation Haryanto Dhanutirto had promised
the House of Representatives that Merpati would start to post
profit in 1998.

Merpati posted a Rp 40.86 billion (US$11.3 million) loss in
the first half of this year.

The airlines' losses dropped slightly to Rp 130 billion 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.

The company, assigned to serve remote areas in the country
with unprofitable routes and fewer passengers, currently operates
90 aircraft including B-737-200s, F-28s, F-27s, ATPs, Casa-212s
and Twin Otters.

Most of Merpati's fleet are aging aircraft, thereby making the
airlines inefficient due to high maintenance costs.

Merpati's marketing director, Toto Nursatyo, said yesterday
the airline had to improve its performance by reducing the costs
within the next six-month period and flying new promising routes.

"We plan to operate three new regional routes this year," he
said.

The new services will include the Jakarta-Denpasar-Perth route
three times a week with Airbus A-310, the Denpasar-Broome route
twice a week with Fokker F-28 and the Denpasar-Taipei three times
a week with A-310 aircraft.

Merpati currently flies to Darwin, Melbourne and Port Hedland
in Australia, Singapore, and Kuala Lumpur in Malaysia.

"The market in Australia is promising. Based on our study,
flights from Perth to Indonesia never see any low season,"
Nursatyo said.

He added that the government had also approved Merpati's plans
to fly to Hong Kong and Jeddah. (icn)