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Parliament Throws Merpati a Lifeline

Ailing Government-owned Airline Given Emergency Funding to Keep Flying.

(7/16/2005) Indonesia's Minister of Transportation, Hatta Radjasa, has told Tempo Interaktif.com that the Government is committed to saving P.T. Merpati Airlines from financial collapse.

The Minister's statement, made following a meeting with Commission V of the National Parliament, followed a decision to extend an emergency cash injection of Rp. 450 billion (approximately US$46.4 million) to avoid a complete cessation of services by the carrier. The cash injections, according to the Minister, will be divvied out in installments with the understanding that the airline's management will commence an immediate downsizing and re-invention of itself as a low-cost carriers while seeking a suitable private investor to secure the Company's future.

Merpati is currently estimated to be hemorrhaging some Rp. 40 billion (approximately US$4.1 million) each month, caused by deep-seated inefficiencies, including bloated payrolls established in the carrier's salad days. At one time, Merpati flew to over 60 domestic and regional destinations. Today, however, the Carrier flies an aging and fuel-inefficient fleet serving only half as many ports-of-call.

According to Minister Hatta, closing the airline completely is "not an option" with the estimated cost of closing the Airline's door approaching Rp. 2 trillian (approximately US$206 million).