Paul Lewis/SINGAPORE
Indonesia's privately run Sempati Air Transport has suspended operations in the face of mounting financial losses, falling domestic traffic and after its shareholders failed to inject further capital into the business.
Sempati's owners have said that, for now, the airline will not be liquidated and have promised to honour all its debts, which employees estimate to be in the region of 2-3 trillion rupiah ($170-260 million). A skeleton staff of around 50 people out of the 700 now employed will be retained to handle ticket reimbursements.
Only three of the airline's five Boeing 737-200s were in operation and all five are being returned to local lessor PT Pann. At its peak, the airline operated a fleet of 25 aircraft, but escalating US dollar leasing charges as a result of Indonesia's currency crash forced Sempati to return its four A300B4s to Airbus and nine Fokker 70s and 100s to General Electric Capital Aviation Services and Fokker.
Its last international service to Singapore was suspended earlier in the year. Seven remaining domestic services linking Balikpapan, Batam, Jakarta, Medan, Pekanbaru, Surabaya and Ujung Pandang will be offered to Indonesia's two state-owned carriers Garuda and Merpati and three remaining private scheduled carriers Bouraq, Mandala and Dirgantara.
Sempati had been promised a fresh injection of capital late last year to revamp the carrier and equip it with 26 ex-United Airlines Boeing 737-200s. The deal was being arranged by Asean Aviation, which is a 40% shareholder in Sempati and partially owned former Indonesia President Suharto's son Tommy Suharto. The additional funds failed to materialise.
Other shareholders in the carrier include the Humpass Group, also owned by the younger Suharto, with a 25% stake, and long time Suharto associate Bob Hassan, with 20%. While there are growing calls for an investigation into the private dealings of the Suharto family, Sempati has denied that its suspension is linked to the downfall of the president.
Meanwhile, the director of Indonesia's directorate general of air communications, Zainuddin Sikado, is warning that unless action is taken to assist airlines, Sempati's demise will be followed by others. Financially struggling flag carrier Garuda is reported to be undergoing a management and board shake-up by the new Government of President Habibie.
Source: Flight International
