RI domestic airlines on verge of collapse

RI domestic airlines on verge of collapse

SINGAPORE (AFP): Indonesia's domestic airlines are on the
verge of collapse amid the economic turmoil caused by the
rupiah's steep depreciation, an aviation journal reported
yesterday.

Hadi Soemarto, president of the Indonesian National Air
Carriers Association (INACA), said the four airlines -- Bouraq,
DAS, Mandala and Sempati -- were in "serious danger" of shutting
down due to huge losses.

"We all fear that they are going to stop operating if the
monetary crisis goes on like this," Soemarto told Flight Daily
News, a journal published in conjunction with the Asian Aerospace
trade show here.

"The domestic airlines only earn rupiah and the rate of the
rupiah is still going down even though the cost are based on U.S.
dollars. It is a very bad situation," he was quoted as saying.

Soemarto held an emergency meeting with the Indonesian
director-general of air communications, Zainuddin Sikado, in a
bid to stave off the collapse, the journal said.

Indonesia is the worst hit by the regional currency crisis
which has wreaked havoc in the region since mid-1997 and put the
brakes on rapid economic growth. The rupiah has lost more than 70
percent of its value against the dollar.

In the interview with the journal late Tuesday, Soemarto ruled
out a merger of Indonesian domestic airlines because their
managements varied.

"But they have to work together or else they can all collapse.
That will be very bad for everybody. People still need to fly,"
he said.

The airlines are seeking ways to postpone payments on leased
aircraft until the financial crisis was resolved.

Soemarto said: "The biggest problem is they cannot afford to
pay the leases for the aircraft. We hope that the aircraft owners
are more understanding and allow us to reschedule some leases."

But he said there was no danger of Garuda Indonesia and
Merpati collapsing because they were owned by government.