Indonesian govt plans Merpati Airlines rescue -minister

JAKARTA, June 12 Thu Jun 12, 2014 4:28am EDT

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JAKARTA, June 12 (Reuters) - Indonesia's government wants to rescue grounded domestic carrier PT Merpati Nusantara Airlines, the country's chief economic minister said, potentially by converting its heavy debts into equity, a cheaper solution than allowing the state-owned airline to go bankrupt.

Merpati, struggling to pay insurance, employee salaries and fuel bills, hasn't been permitted to operate flights since February. "We know that Merpati is facing difficulties (repaying) its debts, so we will continue with efforts to rescue it," chief economic minister Chairul Tanjung said on Thursday after a meeting with state-owned enterprises minister Dahlan Iskan in Jakarta.

The company has more than 6 trillion rupiah ($509 million) in debt. The government and other state-owned companies have decided not to give any more loans to Merpati, deputy state-owned enterprises minister Wahyu Hidayat said in February. ($1 = 11,795 rupiah) (Reporting by Fathiyah Dahrul and Fergus Jensen; Editing by Kenneth Maxwell)

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