TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Govt throws lifeboat to 13 airlines with negative equity
The Indonesian government has softened its stance against 13 airlines that have been told to improve their negative balance sheets by the end of this month
Change Size
T
he Indonesian government has softened its stance against 13 airlines that have been told to improve their negative balance sheets by the end of this month.
The government would assist and provide guidance for the 13 airlines with negative equity should they fail to bring their balance sheets to positive by July 31, Transportation Minister Ignasius Jonan said in a statement.
'If by July 31 the capital increase requirement is not fulfilled and the equity remains negative, the Transportation Ministry will take the following steps: 1. review and examine new service route permits applied by the 13 airlines; 2. ask all 13 carriers to present their business plan to ensure they have a clear plan for healthy equity,' the statement reads.
The ministry would also assist and support all 13 airlines to help them operate in a healthy financial condition, in order to maintain standards of service and safety in accordance with regulations, it added.
Jonan previously said that all of 13 airlines, including an associate carrier of Malaysian budget airline AirAsia, Indonesia AirAsia, Lion Group's full service airline Batik Air and cargo airline Cardig Air, were at risk of having their operating permits suspended.
The remaining 10 airlines are Trans Wisata Prima Aviation, Istindo Services, Survei Udara Penas, Air Pasifik Utama, John Lin Air Transport, Asialink Cargo Airline, Ersa Eastern Aviation, Tri MG Intra, Nusantara Buana and Manunggal Air.
Negative equity occurs when the value of an asset used to secure a loan is less than the outstanding loan.
The ministry discovered that the airlines had negative equity after reviewing the financial reports of 60 domestic carriers.
The statement was issued a day after shares in AirAsia, Southeast Asia's biggest budget airline, fell nearly 13 percent in Kuala Lumpur, its largest decline since it started trading in 2004. The drop was caused by fears that the Malaysian airline's Indonesian unit would be grounded for being unable to improve its balance sheet.
AirAsia's share price gained slightly on Thursday after AirAsia group CEO Tony Fernandes said on Twitter that he had seen a positive outcome from talks with Indonesian officials.
'Had great meetings in Indonesia at the highest levels. Very confident of a good turnaround there. We got some real jewels,' he said.
Fernandes said in April that an initial public offering was being planned for AirAsia Indonesia early next year as travel demand surges. The plans come after a plane operated by AirAsia's Indonesian affiliate crashed in December en route to Singapore from Surabaya, killing all 162 people on board.
AirAsia Indonesia was working on a plan toward positive equity, the company said in an e-mailed statement. The airline would continue, it said, to ensure passenger safety and meet global safety standards.
'AirAsia Indonesia is committed to continue working closely with regulators for the betterment of Indonesia's aviation industry and related sectors,' Sunu Widyatmoko, the carrier's president director, said in the statement as reported by Bloomberg.
At a July 1 meeting, the Transportation Ministry gave 13 airlines until July 31 to improve their financial situation. Hadi Mustofa Djuraid, a special assistant at the ministry, said Wednesday that airlines that still had negative equity by the deadline would lose their operating licenses.
