Merpati plans to sell up to 51% stake
The Jakarta Post, Jakarta
State-owned Merpati Nusantara Airlines plans to sell up to 51 percent of its shares this year in a bid to raise cash to help finance the purchase of new aircraft, according to the company's president.
Hotasi Nababan said on Monday that the government had approved the plan, and would seek the consent of the House of Representatives.
"We're still waiting for House approval ... However, they (the lawmakers) may in the end only approve the sale of a 30 percent or 40 percent stake," he told reporters following a meeting with senior government officials to discuss the privatization plan.
Hotasi explained that most of the proceeds from the privatization program would be used to finance the purchase of around 20 new aircraft.
"We aim to increase the size of our fleet from 40 planes to around 60 planes, while the types of aircraft we operate will be reduced from nine to only four," he added.
He said that the move was expected to create a more efficient airline, a key factor in strengthening Merpati at a time when competition in the industry is becoming tighter with the entry of many new players, both local and overseas.
"We want to develop a more efficient fleet with a capacity of 25 to 30 passengers for each aircraft as we serve (short-range) routes in remote areas," Hotasi said.
He predicted that the demand for short-range routes would grow rapidly in the future, including on the heavily populated island of Java.
The company currently has some 250 routes.
The government is planning to privatize around 14 state-owned companies this year in a bid to raise around Rp 5 trillion (US$588.23 million) to help cover the 2004 state budget deficit, as well as increase economic efficiency.
Earlier, there had been calls for the government to delay the privatization of a number of state enterprises, including Merpati, because of the general and presidential elections, which could dampen interest in the program amid possible political tension, and consequently put pressure on the prices achieved.
But Hotasi said that there had been strong interest from both foreign and local investors in Merpati.
Aside from Merpati, shares in the national flag carrier Garuda Indonesia would also be up for grabs.