Merpati is technically bankrupt: Official

Merpati is technically bankrupt: Official

JAKARTA (JP): State-owned Merpati Nusantara Airlines has
technically tumbled into bankruptcy due to huge debts and the
country's economic crisis, and will need a foreign investor to
bail it out, according to a senior official at the airline.

Merpati chairman Muchtaruddin Siregar said that the country's
second state airline had a massive Rp 1.8 trillion (about US$212
million) debt compared to its assets of only Rp 830 billion.

"This means that Merpati is already technically bankrupt," he
said as quoted by Antara.

He explained that Merpati had suffered a drastic drop in load
factor due to the current economic crisis, which had slashed
people's purchasing power.

He said that Merpati had stopped flying to Singapore and
Australia as well as to many domestic locations in a cost saving
measure.

Muchtaruddin said the government had invited foreign investors
to enter airlines, but only International Aircraft Financial
(IAF) had submitted a proposal.

He said the Merpati management turned down the IAF offer,
which would only provide a US$20 fee per passenger in return for
complete control over Merpati's international routes.

Over 70 percent of Merpati's routes are unprofitable.

Muctharuddin said Merpati had to compete with the country's
flagship carrier Garuda Indonesia on certain routes.

The State Minister of the Empowerment of State Enterprises
Office is preparing restructuring plans for the ailing Merpati in
a bid to create a sustainable business.

The government is searching for strategic partners, either
foreign or domestic.

One alternative is to remerge the airline with Garuda.
Merpati was a unit of Garuda prior to its separation in 1995.
(rei)