Merpati plans to sell up to 51% stake

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.