Merpati hopes to earn Rp 40.5b profit in 1998

JAKARTA (JP): State-owned air carrier Merpati Nusantara Airlines, which has suffered financial problems for several years, expects to post a Rp 40.5 billion (US$5.1 million) profit this year.

Merpati President Budiarto was quoted by Antara as saying Saturday that Merpati was optimistic about achieving its target despite gloomy prospects in the air transportation business.

He said that the government's zero economic growth estimate for this year would seriously affect demand for air travel.

"The sharp fall of the rupiah's value against the U.S dollar has adversely affected public spending, which is reflected in the declining number of passengers going abroad, and in the company's operation income last year," he said.

Last month, Minister of Transportation Haryanto Dhanutirto promised the House of Representatives that Merpati would start to post a profit in 1998.

Merpati posted a Rp 40.86 billion loss in the first half of last year.

The airline's 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 will be converted into government equity shares.

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

Many analysts say that the aging aircraft which make up most of Merpati's fleet make the airline inefficient due to the high cost of maintaining them.

Budiarto said another factor which may have caused the decline in the company's revenue was the lively discount war sparked by the many vacant seats.

"The company's revenue is predicted to slightly decline compared to the 1997 figure, which was Rp 247.4 billion.

"But by creating a sound balance between nonoperational costs, which have been seriously affected by several obstacles, and nonoperational income, our funding is based on sale concepts, such as renting out 15 F-28 and 10 F-27 aircraft."

He said that with these efforts the company expected to post Rp 40.5 billion in profit, and that profits would improve until 2000.

The company's profit target is Rp 82.1 billion in 1999, and Rp 103.1 billion in 2000.

He said that in the current millennium, it had been predicted that the economy would recover and resume its rapid growth both in Indonesia and in other parts of Asia, enabling Merpati to take off.

Merpati has the most extensive flight network in Indonesia and has begun to dominate regional flight networks. It would enjoy a two digit growth rate and may develop into a world class airline, he said.

Meanwhile, Merpati's head of public relations department Tondo Widodo said Merpati would operate extra flights to cope with an expected travel boom over Idul Fitri.

He said Merpati would offer additional flights linking Padang and Batam in a round trip using Fokker-28 aircraft once a day from Jan. 22 to Jan. 28.

Merpati is also offering extra flights once a day linking Batam and Palembang on Jan. 22, 24, 27 and 29, and linking Pontianak and Batam on Jan. 24, 27 and 29. All the additional flights will use F-28 aircraft. (gis)