Merpati has two months left to save itself

JAKARTA. Debt-ridden state-owned airline PT Merpati Nusantara Airlines faces a race against time — just two months — to overhaul its operations and resume its services; otherwise the government will revoke its business permit.

With most of the firm’s flight crew members having already left the company, the airline faces the tough task of attracting customers.

Merpati Employees Forum’s (FPM) former chairman Sudiyarto, who was once the face and voice of the ailing firm’s employees forum, said he had resigned from the airline four months ago to start his own business.

Out of a total 2,000 employees, he said, more than half had resigned from the company. Out of the 178 pilots that worked for Merpati, none had opted to stay, he said.

“The airline now no longer has pilots or air crews. They’ve all resigned. It’s easier for them to find new jobs, unlike the office staff like us,” said Sudiyarto, who had a 20-year career with Merpati.

“This is a result of our frustration because the government has given no clear solution to the problems faced by the airline. What can we do? We have to continue our lives; we haven’t seen our paychecks for a year,” he continued.

Merpati, which is indebted to a number of creditors, has been grounded since February this year. Its debt has reached more than Rp 7 trillion ($565.2 million). The company is struggling to pay employee salaries, insurance and fuel bills. It also recorded financial losses of Rp 7.2 trillion.

Among Merpati’s creditors are state-owned energy firm PT Pertamina, state-owned airport management companies PT Angkasa Pura I and PT Angkasa Pura II and State Asset Management
Company (PPA).

Once the airline decided to halt its operations, the Transportation Ministry suspended its Air Operator Certificate (AOC), the ministry’s director general for air transportation, Bambang Cahyono, said.

According to Bambang, Merpati has been given a year to reapply for its AOC, otherwise it will have to apply for a totally new business permit (SIUP) by proposing a brand new business plan, should it wish to restart its operations.

“The government is waiting for a plan proposed by the airline’s board of directors but up until now we haven’t received the plan,” Bambang told The Jakarta Post. “If the SIUP is expired then the airline will be automatically dead,” he continued.

In October, then state-owned enterprises minister Dahlan Iskan discussed a number of joint partnership plans with around 100 potential investors to save Merpati, in the hope that the airline could propose the suspension of a debt postponement petition (PKPU) to the country’s commercial court to prevent it from going bankrupt. However, none of the potential investors have reached a deal with the airline.

Founded in 1962, Merpati was known as the only airline serving flights to remote areas in the eastern part of the country. However, for years it has struggled with mismanagement and corruption allegations.

Due to a number of cancelled flights and plane crashes, consumer confidence declined significantly. It reported at least five serious accidents since 2009. (Nadya Natahadibrata)