Mandala Airlines Ceased To Operate

Posted on Jan 13, 2011

One of the Indonesian airliners Mandala Airlines has officially ceased to operate as of today. Indonesian transport minister Freddy Numberi confirmed the news and says that the Government will investigate the problems fully.

According to the Minister he does not fully understand the situation with the ailing airliner but suspect it because financial problems.

Mandala fleet

He also can not confirm whether this cessation in the operation will be temporary or permanent.

Freddy says the people do not have to be worry. Mandala will pay all the tickets that are already in circulation and other airliners will fill the void route immediately.

“There are many other airliners available such as Batavia Air and Lion Air. But we need to have a closer look at the particular route in order to make sure no one is unfairly treated” Freddy says.

Mandala was reported to have applied for debt deferment to the Central Jakarta Trade Court yesterday. Mandala President Director Diono Nurjadin says that it is the best step they can take at the moment to ensure the continuation of operation in the future.

Over the past months the airliners have been operating at a loss and requiring new funds badly. Restructuring is one of the ways the company hoped to attract new investors. If their application is granted by the Trade Court, Mandala will have 45 days to submit new business plan and restructuring.

“We believe we can attract new investors because after restructuring Mandala will become a promising investment. At the moment there are huge demand for air travel provider in Indonesia as well as good low cot carriers”, says Diono

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.

Mandala Airlines was founded in 1969 long before the influx of new airliners came in to Indonesia. It was founded by an Air Force general with link to the Indonesian Army. The airlines started to have problems when the Indonesian reformation has forced the Army to divest it self of any business venture. After the Indonesian Government refusal to purchase the share, Cardig International aquire the airline for USD 34 million.

It has been operating quietly as a second tier airliners operating in less populated route and has been making profits until this announcement.

Mandala employee have been promised that they will not be fired and will still receive their normal salary