Merpati needs investors: Laksamana

Merpati needs investors: Laksamana

Tony Hotland, The Jakarta Post, Jakarta

The fate of state-owned carrier PT Merpati Nusantara Airlines and
its some 4,000 employees might be "at stake" following the House
of Representatives' decision to put off the privatization of the
ailing airline, State Minister for State Enterprises Laksamana
Sukardi said on Thursday.

Speaking during a four-hour session with House Commission IX
on financial affairs, Laksamana said privatization was part of
attempts to rescue the airline.

"Merpati has been suffering constant losses. They lost Rp 10
billion per month in 2003 and they've been losing an average of
Rp 21 billion per month in 2004. And as Pak Hotasi said, their
cash flow might allow them to operate probably only for the next
three months," he said.

Minister of Finance Boediono and Merpati president Hotasi
Nababan also attended the hearing.

Merpati has Rp 1.3 trillion (US$139.93 million) in debts, with
assets standing at about Rp 775 billion.

Among the major creditors are the government (Rp 225 billion),
Bank Mandiri (Rp 230 billion) and national flag carrier Garuda
Indonesia (Rp 246 billion).

According to Merpati's financial report, it experienced a Rp
247 billion loss during the first seven months of the year.

"But if (House members) say that we must postpone the
privatization plan, what can we do? But we must now face and
explain this to Merpati's 4,000 employees, who have also been
pushing us to seek a way out," Laksamana said.

The government initially planned to sell about a 49 percent
stake in Merpati to strategic investors later this year (the
government will sell up to a 51 percent stake if the buyers are
local investors).

Several commission members, who expressed their reservations
about the privatization, questioned the effectivity of a
strategic sale when Merpati is struggling under such massive
debts.

They also doubted whether the new investors would preserve
Merpati's core business, which is serving routes in eastern parts
of Indonesia.

The commissioners agreed that Merpati's management should
first complete the conversion of the government's debts into
equity (debt restructuring), saying that was the most feasible
option for the time being.

Looking disappointed after the session, Hotasi declined to
answer journalists' questions.

The coordinator of Merpati's privatization program, Hariadi
Soepangkat, said the House should not be concerned about the
effectiveness of the privatization plan.

"We have to do it now before everything's too late. Many local
and foreign investors have expressed their interest, mostly from
the Southeast Asian region. Some local cigarette producers have
also approached us, like Sampoerna and Djarum, who want to
diversify their businesses," he said.

Hariadi added that a strategic sale would help Merpati get
fresh funds in order to turn its equity positive, which would
boost its value for a planned initial public offering in 2006.