Indonesia's second state-owned carrier, Merpati Nusantara, is getting another government bailout to help it carry out a restructuring that will lead to the departure of half of the airline's employees. Minister for state enterprises Sofyan Djalil says the government will give struggling Merpati another 350 billion rupiah ($38.5 million), which will be at least its second bailout in two years.
In 2006 the Government said it was providing a 450 billion rupiah bailout to the carrier, which has long been in severe financial difficulty, burdened by a large debt and a badly mixed fleet. Much of the new money will be used for severance payments as the carrier will be cutting its workforce by half, to 1,300 employees from 2,590. The airline had already cut its workforce from 4,200 over several years.
Merpati, along with main national carrier Garuda, has faced intense new competition in recent years from privately owned airlines that have grown rapidly. To cope it has tried to shift its focus to operating feeder services in the more remote eastern regions of the country.
It says it is now also planning to move its headquarters from the national capital Jakarta to Makassar, in eastern Indonesia on the island of Sulawesi. The carrier says the move is intended to help it better focus on routes in eastern Indonesia where there is less competition.
Source: Airline Business
