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VP Kalla Calls for Urgent Reorganization of Merpati Airline

Close Door Meeting Discusses Recovery Plans, New Management Team and Debt Restructuring for State-Owned Carrier. Cash Now Insufficient to Meet Payroll.

(7/28/2008) Indonesia's Vice President Jusuf Kalla has issued a call for a reshuffle of the senior management of the state-owned carrier PT Merpati Nusantara Airlines (MZ) in order to repair the working synergy of the company. At this time, the CEO position of MZ is held by a caretaker director, Cucuk Suryosuprojo.

According to Tempo Interaktif, the current director of MZ have been given two days to present a detailed plan to the Vice President providing a road map for the solution of the major problems of the Airlines, including renegotiation of its current debt. "In two days the directors of Merpati must report back to the Vice President," explained Jusman Syafii Djamal, the Minister of Transportation, following an emergency meeting at the Vice President's office last week.

Jusman said that the make up of MZ's board of directors was discussed privately between the Vice President and the Minister for State-owned enterprises, Sofyan Djalil.

Transportation Minister Syafii said he assumed that the individuals appointed to the role will come from a State-owned enterprise, most probably internally appointed form within MZ.

Jusman told Tempo Interaktif that Kalla insists that MZ continue to operate and develop its routes in eastern Indonesia. "The problem of their (MZ) staffing must also be resolved," he added.

Also attending the closed-door meeting at the Vice President's office were the directors and commissioners of Merpati and the Deputy Minister for Finance and the Macro Economy Sahala Lumban Gaol.

Cash is Critically Short

In a separate report in NusaBali the severity of MZ's current problems was underlined by a confirmation that the airline currently has insufficient cash to meet its payroll obligations. The lack of cash was revealed in statements by Indonesia's Minister of State-owned Enterprises, Sofyan Djalil.