Sempati Air grounded by monetary crisis

Sempati Air grounded by monetary crisis

JAKARTA (JP): Minister of Transportation and Communications
Giri Suseno Hadihardjono said yesterday PT Sempati Air, one of
the country's six scheduled airlines, would stop operations after
being crippled for months by the monetary crisis.

"It is impossible for Sempati to continue operations in the
current difficult situation," Giri told reporters after a
ministerial meeting on economy, finance and industry at the
National Development Planning Board headquarters here.

"The government has extended assistance to the company, but
its problem is so complicated that there is no other choice for
it but to stop operation."

He did not say when termination of operations would take
effect, but company employees said they would likely end this
Saturday.

"The management has told us that employees for flight service
will be laid off this Saturday, but those handling administration
would remain on to collect proceeds from agents," a manager said.

Sempati spokeswoman Rima Novianti refused to confirm Giri's
statement yesterday, but said the company's shareholders would
meet Wednesday to discuss whether it should halt operations amid
the economic crisis.

"It's difficult to gain a profit today with 80 percent of our
cost in dollars, while earnings are in rupiah," Rima told The
Jakarta Post.

Indonesia has been worst hit by the region's monetary crisis,
which started in Thailand in July last year. The rupiah sank to
its lowest level of Rp 17,000 per U.S. dollar in January,
compared with a precrisis level of Rp 2,450 last July.

The rupiah was 11,500 against the greenback yesterday.

Rima denied speculation Sempati was folding because of the
downfall of former president Soeharto. Majority shareholders
include Hutomo "Tommy" Mandala Putra and close Soeharto associate
Mohammad "Bob" Hasan.

Sempati, founded in 1989, is owned by the Malaysian-Indonesian
joint venture Asian Aviation Inc. (40 percent), the Indonesian
Army's PT Tri Usaha Bhakti (Truba) (25 percent), Bob Hasan (20
percent) and the Humpuss Group, controlled by Tommy (15 percent).

Rima said Sempati operated a fleet of 25 leased aircraft and
employed 3,500 workers at its peak in 1996, a time when it was
labeled the country's largest private air carrier.

Currently, it uses five Boeing 737 aircraft and has about 700
employees.

Although Giri said the government would ask other airlines to
take on the routes serviced by Sempati, he noted this would be
difficult as most carriers were beset by similar economic
problems and were reducing their flight rosters.

"Anyway, the government will do its utmost to make sure all
provincial towns are served by airflights," Giri said.

The five other scheduled air carriers are state owned Garuda
Airlines, Garuda's subsidiary Merpati Nusantara, Bouraq Airlines,
Mandala Airlines and Dirgantara Air Service.

Except for Dirgantara, which only operates its own aircraft,
the carriers lease many of their aircraft. (jsk)