Merpati returns 17 leased planes to cut operational costs

Merpati returns 17 leased planes to cut operational costs

JAKARTA (JP): The state-owned airline operator PT Merpati
Nusantara Airlines (MNA) has returned 17 of its leased planes to
cut swelling operating costs.

Company president Budiarto Subroto said yesterday that the 17
planes returned to their foreign owners earlier this week
included three F-100s, three Airbus-310s, one BAe-146s and 10 F-
28s.

"We had to return the leased planes in order to survive in the
current sluggish market," he said.

However, he declined to mention the monthly payments required
to lease the planes.

He said the company would also return two more Airbus-310
planes to their foreign owner, French leasing company Partnair,
on June 25 as part of its downsizing program.

A company communications official Tondo Widodo said the
monthly cost of leasing the Airbus-310s through the two year old
agreement was US$420,000 per aircraft.

The loss of the 17 leased planes means that the Merpati fleet
now consists of 53 planes, 36 of which the company owns and 27 of
which are leased.

The company is currently operating three leased Boeing-737s
from PT Pengembangan Armada Niaga Nasional (PANN) at a monthly
cost of $110,000 per aircraft.

Budiarto said the downturn in the country's airline industry
and the sharp drop in the value of the rupiah against the
American dollar had severely hurt the company.

Budiarto said that around 70 percent of the company's spending
was in dollars, with the remaining 30 percent in rupiah.
Operating costs include leasing installments, fuel and the
purchase of spare parts.

The rupiah rallied slightly yesterday to around Rp 15,000
against the dollar, but this slight improvement must be viewed in
the context of its pre-crisis level around this time last year,
which was Rp 2,460 to the dollar.

He said that the company's passenger load factor had also
declined sharply to around 50 percent as a result of the crisis.

"The monetary crisis has forced most people to travel on land
rather than by plane," he said after signing a memorandum of
understanding between the firm and Lufthansa Consulting
yesterday.

Under the agreement, the German company will assist Merpati to
restructure their finances, routes and fleet.

Budiarto said yesterday that Merpati had also slashed the
frequency of flights serving certain domestic routes.

The company, which focuses largely on domestic flights, is
currently only operating eight of its 14 CN-235s and eight of its
25 F-28 aircraft.

Analysts have said that airlines across Asia, including those
in Indonesia, are now fighting for survival and that most
carriers would have to slash costs by selling planes, sacking
staff, cutting routes and returning leased planes.

The country's flag carrier Garuda Indonesia announced late
last week that it planned to return all of its leased aircraft.

Budiarto said Merpati had yet to lay off workers, despite the
crisis it is facing.

Merpati finance director Desmon Ismael said the company had
annulled a cooperation agreement with PT Bimantara Graha
Insurance Brokers, a privately-run company linked to Soeharto's
family, to boost efficiency.

Bimantara Graha Insurance Brokers is owned by the Bimantara
Group, a large conglomerate controlled by Soeharto's second son
Bambang Trihatmodjo. Bimantara Graha Insurance Brokers allegedly
monopolized Merpati insurance.

"We ended the agreement after former president Soeharto
stepped down late last month,' he said. (aly)