12 August 2008

Merpati waits for government bail-out

JAKARTA Ã¢â¬' The future for IndonesiaÃ¢â¬â¢s Merpati Airlines continues to look bleak.

Bali Update (www.balidiscovery.com) reports that promised cash injections from the government, a change in senior management and a difficult decision to terminate nearly half of its employees are among the steps now being made to save the airline from collapse.

MZ's president director Cucuk Suryo Surpojo and operations director Abbhy Widya were sacked this month by IndonesiaÃ¢â¬â¢s Ministry of State-owned enterprises.

In announcing the management shake-up, MZ's corporate secretary, Purwatmo, said the changes were being made to help hasten the current restructuring of the "critically ill" state-owned airline.

"It is hoped that the funds needed for restructuring will be made available in September 2008, allowing the restructuring to move ahead quickly," explained Purwatmo.

According to Bisnis Indonesia , the government will inject US$32.6 million into MZ, with much of that sum to be used to pay the cost of golden handshake termination packages for 1,300 employees who will lose their jobs in the restructuring.

The decision to suspend nearly 50 percent of the MZ workforce was made following a limited cabinet meeting with President Yudhoyono where it was determined that the airline could not survive with its current bloated payroll.

Surplus pilots will be seconded by MZ to Garuda Indonesia which continues to suffer a shortage of qualified flight officers.

The restructured MZ will reportedly focus on serving "pioneer" routes to secondary destinations in Indonesia, primarily in Eastern Indonesia.

In keeping with its route network, MZ will soon move its corporate headquarters from Jakarta to Makassar in southern Sulawesi.