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MNA in Desperate Need of Cash

Merpati Nusantara Airline in Need of Urgent Cash Injection to Avoid Collapse.

(6/16/2003) Merpati Nusantara Airlines (MNA) has made an urgent call on Indonesia's Department of Finance and National Parliament to provide Rp. 200 billion (approximately US$ 24 million) of much needed cash to help the airline avoid bankruptcy.

While the airline's executives insist that the airline possesses a strong cash flow, they contend the extra cash is needed to complete the restructuring steps of reducing the number of employees, the rationalization of the company's fleet of aircraft, and improved customer service.

Quick Cash Fix Unlikely

Insiders at the Department of Finance point out that a cash bail-out for the State-owned airline is a long and drawn out procedure requiring approval from the State Parliament.

Other sources of relief for the cash-starved airline are also problematic. Government guaranteed loans or loans from banks are made unlikely by MNA's negative equity of Rp. 725 billion (approximately US$ 86.3 million) on its balance sheet.

Efforts to find a suitor for a possible privatization of MNA have also been thwarted by the airline's massive debt totals, making the carrier unattractive in the fairly unregulated skies of Indonesia where debt-free start-up carriers are almost certainly seen as better investments for those with money to invest in aviation.

MNA employs a work force of 3,600.