Indonesian Army to sell its own airline

Indonesia is considering selling an army-owned airline, PT Mandala Airlines, as part of efforts to reform the armed forces, military chief Endriartono Sutarto stated today. The Indonesian parliament approved a law in 2004 restricting the armed forces, known as Tentara Nasional Indonesia (TNI), from doing business. The armed forces have widely diversified businesses, mostly run through foundations, in sectors such as forestry and finance. "TNI is no longer allowed to do business," Sutarto told reporters. "On Mandala ... the decision is to sell it."

Indonesia's airlines have been hit by soaring fuel prices. The Indonesian government has said it may sell up to 49% of flag carrier Garuda Indonesia to strategic investors. Garuda defaulted on a $55 million debt repayment at the end of 2005. The government has vowed to help Garuda cope with its financial problems, which Garuda president director Emirsyah Satar has blamed on a weakening rupiah, higher oil prices and competition in the industry.