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Group: Indonesian Airlines May Fall

February 25, 1998

JAKARTA, Indonesia (AP) _ Four domestic Indonesian airlines are near collapse because of the dramatic plunge of the country’s currency, the head of the country’s airlines group said today.

Bouraq, DAS, Mandala and Sempati airlines are being hit hard by mounting losses, said Hadi Soemarto, president of the Indonesian National Air Carriers Association.

``The airlines cannot survive ... if the condition goes on like this,″ he said.

Indonesia’s currency, the rupiah, has lost more than 70 percent of its value since July, hiking the prices of imported materials the airlines use and driving up the cost of leasing aircraft from foreign companies, which demand payment in dollars. All Indonesian airlines have drastically cut their routes.

This has struck the four domestic carriers particularly hard, Soemarto said, because their revenues are in rupiah, while 80 percent of their operating costs are in dollars.

The national carrier Garuda and its subsidiary Merpati Airlines should survive the crisis, in part because they have international flights and therefore earn some revenues in hard currency, Soemarto said.

The association held an emergency meeting Tuesday night with Indonesian transport officials to discuss ways the four carriers could work together to maintain domestic air service. Soemarto said further meetings were scheduled.

On Tuesday, Transportation Minister Haryanto Dhanutirto said Garuda and Merparti would serve routes temporarily shelved by other private airlines, the official Antara news agency said.

Soemarto said it would be difficult for the troubled airlines to merge, but he is suggesting they form ``strategic alliances″ to save money and consolidate services during the crisis.

Another problem is government restrictions on airline ticket prices. Soemarto said companies would like to hike prices by nearly 50 percent.

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