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Jakarta Post

SOEs, led by Garuda, join hands to bring Merpati back to life

  • Riza Roidila Mufti
    Riza Roidila Mufti

    The Jakarta Post

Jakarta   /   Thu, October 17, 2019   /   05:01 pm
SOEs, led by Garuda, join hands to bring Merpati back to life A Merpati Nusantara Airlines plane before takeoff. (kompas.com/Erwin Edhi Prasetyo)

National flag carrier Garuda Indonesia is working hand-in-hand with nine other state-owned enterprises (SOEs) to bring PT Merpati Nusantara Airlines back to life after the latter ceased operations in 2014 due to financial problems. 

Under a cooperation agreement signed on Wednesday, Merpati and the SOEs will work together in the cargo, ground handling, maintenance repair and overhaul (MRO) and training center businesses. 

The 10 SOEs are Garuda Indonesia, cement maker Semen Indonesia, energy giant Pertamina, logistics agency Bulog, trade company Perusahaan Perdagangan Indonesia, electricity giant PLN and banks Bank Tabungan Negara (BTN), Mandiri, Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BRI).

“We will collaborate to bring Merpati back in business while at the same time it [the cooperation] will benefit us too,” said Garuda Indonesia president director Ari Askhara in Jakarta on Wednesday. “We hope this cooperation can be an opportunity for Merpati to restart operations and bring in cash flow to pay installments to its creditors.” 

Founded in 1962, Merpati ceased operations in 2014 when the state-owned airline was strangled by mounting loans to several parties including several SOEs. In 2018, the court decided that Merpati was not bankrupt and ordered it to pay debts amounting to Rp 10.9 trillion (US$773.17 million).

In November last year, Merpati’s creditors gave the airline the opportunity to run businesses to pay back its loans. 

Under the agreement signed on Wednesday, Merpati will operate an air cargo business for domestic and international routes using Garuda’s fleet. Bulog, Perusahaan Perdagangan Indonesia, Semen Indonesia and Perikanan Nusantara will use its services.  

In the MRO business, Merpati will act as a marketing agent and provide turbine maintenance services for Pertamina and PLN.  

In addition, Garuda Indonesia will help manage Merpati Nusantara's training center so that it can become a source of income for the company.

“We are thankful for this collaboration. This will assist Merpati to utilize its resources and capabilities to fulfill the requirements of the company’s restructuring process,” Merpati president director Asep Ekanugara said. 

He said the cooperation did mean Merpati could fly again but would assist it to eventually return to full operations.