Merpati urged to sell aircraft, lease planes instead
Merpati urged to sell aircraft, lease planes instead
The Jakarta Post, Jakarta
Ailing state carrier PT Merpati Nusantara Airlines should sell
some of its aircraft and other assets in a bid to raise funds and
help resolve cash flow problems in the short-term, the Ministry
of Finance says.
Treasury director general Mulya Nasution said the company's
other main creditors, Bank Mandiri and national flag carrier
Garuda Indonesia, supported the sale plan.
"We haven't seen any effort to improve the cash flow (in the
company). Why not unload some of its aircraft, the proceeds of
which can then be used to lease more planes so as to boost the
carrier's revenue," Mulya said on Tuesday night during a
gathering to break the fast.
Mulya did not elaborate how many aircraft -- out of some 40
Boeing and Fokker jets owned by Merpati -- should be sold. He
said the move would secure the company's financial balance for
about four months, the period needed before the planned
conversion of the firm's government debt into equity takes place.
At present, the firm has Rp 1.3 trillion in debts and assets
worth about Rp 775 billion. Its major creditors are the
government (Rp 225 billion), Mandiri (Rp 230 billion) and Garuda
(Rp 246 billion).
The House of Representatives and the firm have agreed the
planned debt-to-equity conversion would take place prior to
Merpati's privatization. However, Mulya said an audit was needed
in advance before the conversion plan.
"The audit process could take about three to four months," he
said. This put more pressure on Merpati to quickly improve its
cash flow and selling the aircraft was a good option, he said.
"I do not think they (Merpati) have another choice. They have
to accept the suggestion, because it did not come only from the
government, but from other creditors because obviously the
creditors do not want to lose their money as well," he said.
The heavily indebted Merpati needs fresh capital to help
restore its equity to positive territory and expand its business
amid tough competition in the airline industry.
If successful, the sales would eventually boost its value
ahead of its privatization program, Mulya said.
The government, after securing approval from the House of
Representatives last month, is set to sell a 49 percent stake in
Merpati to strategic investors next year.
The stake on sale could be raised to 51 percent if the buyers
are local investors.
The debt restructuring (debt-to-equity conversion) and a
strategic sale to foreign and local investors are part of the
company's restructuring program set out to keep it afloat.
An initial public offering (IPO) -- selling shares to public
investors in the stock market -- is planned after the restructure
and sale.