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Merpati in Need of a Cash Lift

Merpati Awaiting US$63.6 million Government Cash Injection to Continue Financial Restructuring Efforts.

(5/16/2011) Merpati Nusantara is in need of a cash injection from the Indonesian government of Rp. 560 billion (US$63.6 million).

The corporate secretary for PT Perusahaan Pengelola Aset (PT PAA), Renny Rorong, told Kompas, "we are awaiting the decision of the Committee for Restructuring and Revitalization which is led by the Minister of State-Owned Enterprises for the additional capitalization of Rp. 560 billion."

According to Renny, the proposed funds will be used for the maintenance of aircraft engines, upgrades in maintenance facilities, making the company cash positive and improving the company’s information technology system. These improvements were those recommended by PT PAA to the government as part of the restructuring of Merpati.

Merpati’s restructuring program is taking place in accordance with a decision taken in office of the Indonesian president on August 7, 2008.

Renny told the press that the PT PAA had earlier advised Merpati that the plans to purchase Chinese-made MA-60 aircraft were very sensitive to passenger loads, the cost of fuel and the number of operating days.

Merpati’s purchase of the Chinese aircraft has been criticized following the fatal crash of one of the newly purchased aircraft in Papua in early May.

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