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Merpati Flying Troubled Skies

Merpati Nusantara Appears to Be a Company in Deep Trouble.

(1/14/2002) Merpati Nusantara Airlines (MZ), a government-owned Indonesian domestic carrier, seems beset by problems at almost every front. As if the generally unfriendly skies of aviation worldwide and the intense competition in the increasingly open skies of Indonesia weren't enough to contend with, signs are that the Airline's Management may soon be replaced and the carrier's pilots are preparing to undertake a "go slow" action.

Current Board to Be Replaced

20 Lead workers from MZ recently appeared before an Indonesian Parliamentary Commission to complain to lawmakers about the way the carrier was managed. Claiming widespread mismanagement, during that hearing the pilots confirmed their intentions to strike or, at the very least, "go slow" if the Airline's Directors were not replaced.

Following that meeting the State Minister for State-Owned Enterprises sent a letter to the Company's Management calling for an urgent extraordinary meeting of shareholders, ostensibly for the purposes of changing MZ's Directors. Ferdinan Nainggolan, the Deputy of the Minister, confirmed this in comments made on Friday, January 11, 2002, where he stated, "if the changes (in the directors) were not soon made, the Company will collapse."

Current Director Respond

Meanwhile, MZ's Directors have objected strongly to being cast as the "fall guys" for the airline's many problems. Accepting that changes to the composition of the Board of Directors is always the owners' prerogative, the current Directors have launched a counter-attack in the local press vehemently rejecting any depiction of their performance as "poor."

MZ's President Director, Wahyu Hidayat insists the only fair evaluation of the present board's performance is a comparison with the track record of their predecessors. The current management has increased the size of the airline's armada from 23 to 35 aircraft and the losses in 1998, before the new board's appointment, totaled Rp. 660 billion, a figure reduced to Rp. 74 billion one year later under their management regime.

A Looming Showdown

Despite the promise of a Shareholder's meeting within the coming month and an almost certain change of leadership at the airline, an earlier showdown appears to be looming between the Airline's pilots and the current Directors. MZ's pilots have threatened a "slow-down" in the week commencing January 14, 2002, to drive home their desire for an urgent replacement of management. Original plans for a carrier-wide strike on January 14 have apparently been downgraded when MZ's lame-duck managers made it clear to the pilots that such an action would result in dismissals for those involved.