Andrzej Jeziorski/SINGAPORE
Indonesia's Sempati Air has been declared bankrupt as the world's fourth-largest country continues the struggle to revive its ailing airline industry.
Domestic rival Merpati Nusantara Airlines is still searching for foreign funding as it also faces possible insolvency, while Garuda Indonesia has yet to finalise its new business plan. The flag carrier, however, has moved to a positive cashflow position - one of the few positive indicators in a country which remains firmly in the grip of the Asian malaise.
Sempati ceased operations in June last year after being crippled by the collapse of the rupiah. It was declared bankrupt by the Jakarta Commercial Court last week. Sources say the airline is being pursued by 487 creditors for debts totalling 1.6 trillion rupiah ($220 million), and "does not have any assets to speak of, except the remaining aircraft", worth 83 billion rupiah. Sempati is also one of the Indonesian Bank Restructuring Agency's 200 biggest debtors, owing the institution 218.5 billion rupiah.
The carrier's fleet comprises five Boeing 737-200s and four Fokker F27s, all grounded in Jakarta and owned by major shareholder Tommy Suharto - the youngest son of ousted former president Suharto. Two more 737s were on lease from Perusahan Armada Niaga Nationale, but have been returned. A liquidator will manage the distribution of Sempati's assets among its creditors.
Sempati went under when the Asian economic crisis sent the local currency into a nosedive - the carrier having incurred costs in US dollars but accrued revenues in rupiah. In the bankruptcy petition, the carrier's lawyers write: "Sempati has experienced extraordinary losses [since July 1997] because the appreciation of the dollar-caused the cost of operations and maintenance to soar from two to five times its original cost."
Suharto and his Humpuss group own 30% of the airline, while 25% is held by Mohamad Hasan, a known Suharto confidante. A joint venture between Turba, an Indonesian army company, and Malaysia's Asian Aviation owns a further share of the equity.
Garuda, meanwhile, says it does not expect to finalise until the end of this month a plan to restructure its operations and debt. The proposal, being drafted with the help of Deutsche Bank, should have been presented to overseas creditors in June. Indonesian bank Danareksa is helping to restructure domestic loans.
Garuda is believed to have short-term debts totalling $380 million, with about $700 million owing in long term debts, mostly for aircraft leases. The airline was close to collapse last year before Lufthansa Consulting was brought in to help turn it around. The consultancy says load factors have risen to 68% and that it showed a positive operating profit in the first quarter of this year.
State-owned Merpati, which Jakarta has designated for development in a bid to build it into the second national carrier, continues to operate, albeit from a reported position of technical bankruptcy. The airline needs to secure foreign funding by the end of September, or it, too, could go to the wall.
• Flight International sister on-line service Air Transport Intelligence reports that Indonesian start-up carrier GT Air plans to begin scheduled services before the end of this year, despite the depressed domestic market.
Source: Flight International
