Mandala Airlines Halts Operations


Budget carrier Mandala Airlines suspended operations on Thursday as it seeks to restructure debt of Rp800 billion (US$88.5 million) and secure strategic backers.

President Director Diono Nurjadin said a debt restructuring request would be filed in the the Commercial Court in a bid to keep the airline aloft.

“This is the best course of action to ensure the continued survival of the airline,” Nurjadin said in a statement.

“Over the past few months, Mandala Airlines has been performing at a commercial loss and the situation now is such that we need to restructure the company to pave the way for the entry of new investors.”

He told reporters operations would cease temporarily “so we can focus on debt restructuring and invite several potential investors.”

A lawyer for the airline, Nien Siregar, said on Friday that Mandala’s debt had reached Rp800 billion.

He said creditors included “local and foreign firms.”

Mandala is 51-percent owned by PT Cardig International and 49 percent by US-based Indigo Partners LLC, according to its website.

An airline spokeswoman said the carrier stopped renting six aircraft in March as costs were too high, and currently operated five aircraft.

“We’re optimistic we can find new investors and meet the minimum requirement of 10 aircraft by 2012,” she told Dow Jones Newswires.

Industry analysts have previously said the country’s aviation industry will need to consolidate in the near term as capital requirements and costs, notably fuel prices, continue to rise.

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