Sempati Air's recently appointed president, Santun Nainggolan, is warning that the Indonesian regional carrier's financial problems will get worse, unless the company is restructured and jobs shed.

Nainggolan has compared Indonesia's largest private airline to an "overloaded boat" in danger of sinking if action is not taken to cut costs and reduce its high level of debt. Audited financial figures for Sempati are not available, but the carrier is reported to be in the red by up to $300 million.

A major shake-up has been expected since the sudden departure of the airline's former president, Hasan Soedjono, late in 1996, and the appointment of former Citibank vice-president Nainggolan as his replacement. Sempati is suffering from falling yields and rising overheads.

In March, local credit agency Pefindo downgraded Sempati's rating. The airline had also been planning to float between 15% and 30% of its stock, but has repeatedly delayed the initial public offer.

Remedial measures have already been taken, including axeing Sempati's services from Jakarta to Kuala Lumpur and Taipei, and reviewing other destinations. The airline also plans to dispose of non-core businesses such as maintenance and catering, as well as reducing its 2,800-strong staff.

Sempati carried 3.6 million passengers in 1996.

Source: Flight International