Merpati Nusantara Airlines is going through a major shake-up of its senior management, in the lead-up to final separation from its parent, flag carrier Garuda Indonesia, and eventual privatisation.

Three new executive directors have been appointed to the struggling regional carrier. Desmod Ismael is appointed as new financial director, Indra Setiawan commercial director and Sunarko Kuntjoro technical director.

Sources within the airline are not surprised by the new appointments and warn that more changes are in the pipeline. Two of the outgoing vice-presidents - Ishak Sumawiria, and Agus Riadi Santoro - were appointed to Merpati only 18 months ago, during the last high-level shake-up, which included the sacking of airline chief Ridwan Faturuddin.

Merpati's new directors are tasked with turning around the airline which, according to local reports, lost 130 billion rupiah ($53.5 million) in 1996, on top of losses of 133 billion rupiah in 1995. The airline is saddled with 600 billion rupiah of debts, which the new financial director is asking the Indonesian Government to assume and convert into equity.

Critics say that the airline, with some 5,000 employees, is overmanned and inefficient. Merpati is required by the Government to operate unprofitable "pioneer routes" to remote and developing areas of the Indonesia archipelago.

The fleet is also in urgent need of rationalisation and replacement. Merpati operates more than 90 aircraft, large numbers of which are grounded for lack of spare parts. A total of 11 different types of aircraft is in the fleet, including three ex-Lufthansa 737-200s, 17 operational Fokker F28s, 11 F27s, one BAe 146, and four leased ATPs, which have been grounded following a fatal crash in April.

The airline has still to finalise lease financing on 16 new IPTN CN235-220s, while negotiations with KLM to lease three more 737s are at a standstill. It was the refusal of the last president, Ridwan, to lease more locally built CN235s that led to his dismissal.

Source: Flight International