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irlines with negative equity will receive no more leeway after having been granted an extended deadline by the Transportation Ministry to improve their balance sheets, the minister has said.

Transportation Minister Ignasius Jonan told a press briefing on Wednesday that the at-risk airlines have until Sept. 30 to provide his office with proofs of equity turnaround actions taken by the companies. If they fail to provide such documentation by the extended deadline, the ministry would carry out thorough reviews of their whole business plans, operations and airworthiness.

'€œWe will revoke their air operator certificates [AOC] if from the review we find out that they are not capable of flying,'€ he said in a press briefing at the ministry'€™s office in Central Jakarta, adding that for the time being, his office would not grant any new route applications and business expansion plans proposed by the airlines.

'€œNegative equity is unhealthy for a transportation company that holds responsibility for others'€™ safety,'€ he said.

Negative equity occurs when the value of an asset used to secure a loan is less than the outstanding loan.

Jonan revealed that some airlines had not provided legal proof of fund-raising, although they had submitted letters proclaiming their abilities and plans to raise the equity to the ministry after the first deadline of July 31 expired. The problematic airlines are Indonesia AirAsia, Cardig Air, Tri-MG Intra Asia, Air Pasifik Utama, Ersa Eastern Aviation, Eastindo Services, Asialink Cargo Airlines, Jhonlin Air Transport, Transwisata Prima Aviation, Hevilift Aviation Indonesia and Asian One Air.

Lion Group'€™s full service airline Batik Air, which was previously on the list, was later removed after it managed to return to a positive state following a debt swap.

The transportation ministry had revoked the AOCs of six airlines, namely Asco Nusa Air, Air Maleo, Manunggal Air, Nusantara Buana Air, Jatayu Air and state-owned Survai Udara Penas, as of Aug. 1. The revocations were undertaken because the airlines failed to fulfill the minimum planes requirement. Three of them, Nusantara Buana Air, Manunggal Air and Survai Udara Penas, were also among the airlines with negative equity.

Separately, Indonesia AirAsia president director Sunu Widyatmoko said that his company planned to issue perpetual bonds to bolster its equity position by the end of September to avoid having its operating license revoked.

The company plans to sell as many of the notes as needed to take its financial position out of negative equity, Sunu said.

'€œWe will certainly achieve positive equity before the set deadline,'€ Sunu said. '€œWe will sell perpetual bonds, which will be treated as equity in accounting terms.'€

Sunu also added that his company would fulfill the cabotage principle, for which the injection will come from domestic investors.

Minister Jonan has warned that an airline should be majority owned by Indonesians, otherwise its registration would be revoked.

The negative list of investments issued by the Investment Coordinating Board (BKPM) last year regulates that an airline company can have a maximum of 49 percent foreign investment in its capitalization. The remaining 51 percent must be contributed by Indonesian investors. (prm)

'€“ Nadya Natahadibrata contributed to the story