Merpati to get fresh funds only after better performance

State airline company PT Merpati Nusantara Airlines has to improve its performance first before the government can inject it with  Rp 300 billion (US$33 million) in fresh funds, Finance Minister Sri Mulyani said.

She said President Susilo Bambang Yudhoyono had ordered an audit on the state-owned airline. "The president had asked that PT Merpati be audited to ascertain its current financial condition," the minister said.

Besides, Merpati was also required to  make a business plan first such as flight routes that should be maintained, operational fund reduction scheme and the needed investment.

The business plan is required so that Merpati will  have a sound financial balance under a good management, she added.

"This constitutes a new job for the new management to draw up a business plan which starts with a good new financial balance.

Only after that can the Rp300 billion be injected," she said.

The government has decided to inject Rp300 billion as its participation capital. It has also decided to lay off Rp1,300 Merpati employees. Some Rp200 billion of the Rp300 billion fresh capital will be used for severance payments.

The government has shaken up the board of directors of Merpati which is now suffering Rp20 billion a month.