Desy Nurhayati, Jakarta – State airline PT Merpati Nusantara has been forced to axe more than half its workers and receive a government bailout in a major restructuring program designed to stave off a collapse.
The government stepped in to save Merpati with a Rp 350 billion (US$38.6 million) cash injection, also requesting the dismissal of 1,300 of its 2,590 workers to help boost efficiency, State Minister for State Enterprises Sofyan A. Djalil said Thursday.
"The President has approved the plan to invest the money in the hope that Merpati will be able to revive and run its operations normally," Sofyan said after a Cabinet meeting at the Presidential Palace.
"We have to take immediate action as the airline is suffering huge losses. The employees will receive their severance pay by the end of this month."
Severance pay will account for Rp 220 billion of the rescue fund.
Some Merpati pilots who are not laid off will be transferred to Garuda Indonesia because the national flag carrier needs more pilots, Sofyan said.
Since the administration of former president Megawati Soekarnoputri, Merpati has been plagued by mismanagement, reportedly stemming from profiteering among those in political parties who have vested interests in the airline.
Acting Coordinating Minister for the Economy Sri Mulyani Indrawati warned the government would not inject the necessary capital unless Merpati management provided a feasible business plan and demonstrated it could uphold good governance in managing the money.
"The airline has not recorded the number of its passengers in its financial account. So this is the same as corruption. The new managers must improve the airline's governance," she said.
President Susilo Bambang Yudhoyono has ordered a major audit of the company to help provide a better picture of its condition.
As part of the restructure, on Thursday the government dismissed Merpati president director Cucuk Suryo Suprodjo, former director general of air transportation at the Transportation Mministry, who had been in the position five months.
Bambang Bhakti, former director of the Jakarta International Cargo Terminal, was appointed the new president director.
The government has also decided to move Merpati's headquarters from Jakarta to Makassar, South Sulawesi, in a bid to improve its potential to service remote areas, which are mostly located in eastern Indonesia.
Merpati, which has recorded Rp 20 billion in losses a month over the past several months, had to ground several airplanes because it lacked the funds to fix their engines. At present, the company can operate 19 airplanes.
Established in 1962, Merpati became a subsidiary of Garuda Indonesia in 1978. Merpati's development mission, assigned by the government of the time, was limited to serving only pioneering, unprofitable routes in remote areas.
In 1997, Merpati was reborn as an independent airline after separating from Garuda.