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)