The government is likely to inject more funds to resuscitate PT Merpati Nusantara Airlines from collapse as it opts to avoid liquidating the state-owned airline company due to high costs.
More funds are needed to support Merpati in repaying its significant debt, reported at Rp 1.6 trillion as of March 2010.
"Last year the company asked for Rp 1 trillion *of capital injection* from the government, but the government only came up with Rp 300 billion," Said Didu, the secretary to the state-owned enterprises minister, said Friday.
A preliminary review of Merpati's financial performance on Thursday by the ministry showed that the company was facing several problems including a lack of aircraft and of funds.
"Merpati is also struggling due to the delay in the delivery of aircraft from China," he said.
Previously, Merpati ordered 15 propeller aircraft that were to have been delivered in January to strengthen eastern Indonesia routes to East Nusa Tenggara, Sulawesi and Papua.
Another obstacle is the lack of government funding under the State Asset Managing Company (PPA). The PPA was created in 2004 to replace the now-defunct Indonesian Bank Restructuring Agency (BPPN). Its tasks have now been expanded to restructuring all state assets, not only banks.
However, Said said that the funds needed for restructuring were still lower than if the company was to be liquidated.
"The liquidation fund could be two to three times bigger than the restructuring fund," he said, adding that there were no plans to liquidate Merpati because of its key role in serving eastern Indonesia routes and because of a lack of liquidation funds.
State-Owned Enterprises Minister Mustafa Abubakar said Merpati would present a report on the company's performance on Friday. This second meeting would discuss future restructuring strategy.
PPA president director Boyke Mukizat told Antara news agency that Merpati still needed a Rp 2 trillion injection following the restructuring.
Boyke said the company's level of debt was very significant, and that this had become a major stumbling block in its' future business development.
Merpati currently operates two Boeing 737-200, six Boeing 737-400 and seven Fokker 100 jets. (not)
