Merpati pilot union against privatization plan

Tony Hotland, Jakarta

The Association of Pilots of PT Merpati Nusantara Airlines has refused the management's plan to privatize the state-owned company, but failed to disclose any details regarding the refusal.

However, Merpati's general manager in charge of corporate affairs Imam Turidy said the dispute between the association and the company's management was simply a misunderstanding.

"They thought the privatization plan would be conducted before the current government ends its tenure. The fact is, we're only making preparations to get permission for the privatization. The privatization itself will hopefully take place next year," he said.

Merpati is hoping that by privatizing the company it will help remedy its worsening financial state and enhance its competitiveness. It currently has Rp 1.3 trillion (US$152.94 million) in debts, with assets standing at Rp 800 billion.

The House of Representatives has demanded that the privatization be executed after the airline restructures its business and debts to assure its health and prevent a low sales value.

The airline is trying to speed up the conversion of its Rp 225 billion debt owed to the government into equity and is in talks with other creditors, such as Bank Mandiri and national flag carrier Garuda Indonesia, to do the same with those debts owed.

Merpati owes Rp 230 billion to Bank Mandiri and Rp 246.7 billion to Garuda Indonesia.

"We hope to complete the restructuring of our debts within the next two months. After our financial sheet is balanced, it would be easier for us to get loans from banks, and to conduct a private placement," said Imam.