T

he government'€™s decision on Tuesday to save ailing state-owned carrier Merpati Nusantara Airlines from liquidation has opened the way for the entry of new investors who had earlier expressed an interest in acquiring the carrier, a minister said.

State-Owned Enterprises Minister Dahlan Iskan said on Tuesday that a number of foreign and domestic investors had expressed an interest in becoming strategic investors to maintain the airline'€™s operations.

However, the investors had been awaiting the government'€™s decision as to whether it would keep the company afloat or close its operations down.

Merpati faced the real threat of closure due to its tremendous debts, totaling Rp 6.7 trillion (US$578.7 million), which is owed to the government and several state-owned companies including oil firm PT Pertamina, airport management companies, PT Angkasa Pura I and PT Angkasa Pura II and the Asset Management Company (PPA).

During a meeting led by Coordinating Economic Minister Hatta Rajasa, the government decided to keep the airline flying and help find investors to repay its debts and fund a route expansion. The PPA had proposed to liquidate Merpati as it doubted the airline'€™s capacity to grow and to pay its debts.

'€œThe government thinks the company still has potential,'€ Hatta said.

He said the government would invite strategic investors to take over the airline by assuming its loans. This approach has been adopted before, for National flag carrier PT Garuda Indonesia to handle the company'€™s debts in 1998.

Hatta added that the government'€™s decision to save Merpati from liquidation was based on market considerations. He said the aviation industry in Indonesia was growing while the airplane services industry had yet to meet market demands.

He added that Merpati had one month to draw up a business plan and present it to the government'€™s economic team before it would be submitted to the House of Representatives. (tam)