The financial troubles of PT Adam Skyconnection Airlines (Adam Air) climaxed Tuesday with airline regulators revoking the company's operating certificate as of Wednesday.

"With this I revoke Adam Air's operating certificate. Adam Air is no longer allowed to operate its planes," the Transportation Ministry's director general for air transportation, Budhi Mulyawan Suyitno, said at a press conference in Jakarta.

According to regulations, the company now has three months to address its internal problems before its Aircraft Operator Certificate is permanently revoked.

Responding to the decision, Adam Air president director Adam Aditya Suherman said the airline was working to address its financial problems. He also confirmed that all operations had been shut down as of Tuesday morning.

"Our employees are deeply demoralized now. So, I suppose, this decision is in the best interest of everyone," he said.

Earlier this week, PT Bhakti Investama, which owns 19 percent of Adam Air through its unit PT Global Transport Services (GTS), and the Bright Star Perkasa business consortium, which holds a 31 percent stake, announced they were pulling out of Adam Air and selling their stakes to the airline's founder Suherman and Sandra Ang.

Bhakti Investama president director Hary Djaja said the investment company would protect the interests of its public shareholders should its investment through GTS in Adam Air cause any losses.

Hary said his firm decided to pull out of Adam Air after claims by Bhakti Investama's legal adviser, Hotman Paris Hutapea, that Adam Air's management had misused internal funds totaling Rp 2.1 trillion.

Hotman also said potential losses suffered by the government related to loans from state-owned Bank Rakyat Indonesia reached Rp 50 billion.

Hotman said his clients planned to report the misuse of funds to the Corruption Eradication Commission if the airline refused to be transparent in its financial reports, especially regarding cargo and ticket sales.

Suherman and Sandra Ang, who hold the remaining 50 percent stake in the airline, plan to buy the stake from Bhakti for Rp 100 billion in September, Hotman said.

Adam refuted Hotman's statement, saying Suherman and Sandra had not accepted the offer and that no notification had been delivered to the airline's management.

Also Tuesday, dozens of college students protested the cancellation of Adam Air flights at Soekarno-Hatta airport, Tangerang.

"We were informed of the cancellation only five minutes before the scheduled departure," one of the students, Mia Kurnaedi, 23, said as quoted by Antara news agency.

She said a group of students from Bandung, Makassar and Kalimantan were scheduled to fly to Batam aboard an Adam Air flight.

Another passenger, Hasaniah, 58, said she bought a ticket for an Adam Air flight from Jakarta to Surabaya for Rp 500,000, but was only refunded Rp 290,000 when the flight was canceled. (lva)

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