D

ebt-ridden Merpati Nusantara Airlines (Merpati) on Thursday signed an agreement with state-owned aircraft manufacturer Dirgantara Indonesia to purchase 20 units of the 28-seater, turboprop-powered CASA C-212 to expand its flight network to the country’s more remote locations.

The aircraft, designed specifically to fly short and medium distances, is priced at around US$6 to $7 million each, making the deal worth up to $140 million in total, said the company’s newly appointed president director Rudy Setyopurnomo.

“The procurement of these CASA planes, complete with their state-of-the-art technology, reflects Merpati’s commitment to develop the aviation industry in Indonesia,” he said, expressing his optimism that procuring the planes would benefit Merpati, as the country currently has a high, untapped demand to fly short and medium distances.

Four of the 20 planes were slated to be completed this year and their presence would allow his company to establish at least 10 new routes, Rudy said without elaborating any further on the proposed routes.

Rudy explained that the financing of this deal would come from bank loans as well as contributions from the administrations of isolated regencies in Indonesia, which he claimed had all agreed to contribute to the financing of the deal.

“New routes established from the presence of these planes will contribute around 25 percent to Merpati’s total revenue,” Rudy said.

State-Owned Enterprises Minister Dahlan Iskan, who also attended the press conference, praised Merpati’s audacity in procuring the planes. He said the planes could help foster the country’s economy as their presence would open access to the country’s isolated regions.

“I once held a meeting with a regent whose area was so isolated that he found it difficult to travel to neighboring cities ... I am optimistic that the presence of these planes can solve such problems,” said Dahlan.

However, Dahlan, whose decision to install Rudy in May to lead the ailing airline was met with protests among Merpati pilots, acknowledged that Rudy still had a lot to do, and that Merpati “still had a lot of debts to repay”.

According to Rudy, Merpati’s debts this year reach a massive Rp 3 trillion, most of which are owed to three state-run enterprises: oil and gas company Pertamina, aircraft operator Angkasapura and Bank Mandiri.

Merpati, which suffered negative equity of Rp 2.8 trillion last year, received a Rp 561 billion loan from the State Asset Management Company on Dec. 30, 2011, to assist with the repayment of its debts.

Nevertheless, Rudy claimed that Merpati was on the right track to becoming a financially healthy airline, saying that his two-month stint as Merpati’s president director had brought a massive windfall for the company. “Before [my installment], our daily EBIT [earning before interest and taxes] was minus Rp 1.7 billion. Now we earn approximately Rp 500 million daily. Isn’t this fantastic news?” Rudy told reporters.

He said the airline also saw an increase in the passenger load factor, which represents flight occupancy, from 60 percent to 90 percent for the last two months, which coincided with the country’s holiday season.

The troubled airline currently has 29 aircraft operating on a daily basis, including nine Boeing 737s, three DHC-6s, two CASA C-212s, 14 MA-60s and one Fokker 100.

“With our current performance, I am optimistic that we will eventually pay off all our debts,” the president director said. (sat)