Home' Asian Aviation : AAV October 2011 Contents AsianAviation | OCTOBER 2011 45
Indonesian low-cost carrier Mandala Airlines operates from Jakarta to 13 domestic and three regional destinations.
Pat Brennan spoke with Chief Commercial Officer Adrian Hamilton-Manns on the sidelines of July’s Aviation Outlook
Summit in Sydney.
Until 2006, Mandala Airlines was owned and operated
by the Indonesian military, ser ving as both a strategic
reser vist airline, as well as a second-tier commercial
operator. Transitioning into private ownership, the
airline established itself as a low-cost carrier (LCC),
placing the first Indonesian order for Airbus A320
jetliners in 2007. In 2009, the carrier was removed
from the safety blacklist banning Indonesian carriers
from operating into the European Union. All seemed
well until rising debt forced the airline to file for
bankruptcy protection in January this year.
Q: In this difficult period, can you
explain the company’s current status
and how your re-structuring plans
AHM: As widely known, at the beginning of this year
we entered into a Chapter 11 position which, under
Indonesian law, allows a suspension in payments, to
allow us to restructure our debt. As part of the process,
we were obliged to return our fleet of leased aircraft.
So at this point in time our operational fleet is zero,
though we still have a current order with Airbus for
25 A320-200 powered by the [International Aero
Engines] V2500. Our restructuring plans have gone
well and we are in discussion with our potential
investors on a re-launch strateg y.
Q: What is the size of your workforce
and what’s happening to them
during this period while you are not
AHM: We have retained our workforce, which currently
sits at 800. Many of our pilots have been transferred to
other carriers for the time being. As time has moved on,
there have b een a number that have left us, but we still
retain most in readiness for the re-launch .
Q: Tiger Airways and the Saratoga
Investment Corporation are being
touted as major equity partners in
a re-launched Mandala Airlines.
What can you tell us about how far
the talks have progressed and if the
contract has been drawn up as yet?
AHM: Tiger and Saratoga are in discussions with us
and we would hope to have a workable way for ward
in the very near future. They are g oing through
due diligence, and while we have seen a slip in our
preferred re-launch, we are optimistic that it will
happen soon. Much of our discussions have been
centring on what a re-born Mandala might look like
in fleet composition, route structure etc. While our
route network was ver y heavily biased towards the
domestic market, we are exploring with Tiger how
a more balanced and integrated model might work.
Q: What were the issues that led you
to the point where you had to seek
Chapter 11 protection?
AHM: It was a combination of factors. The fleet
transition from the Boeing 737 Classic to an Airbus
fleet as the LCC model was being built cost more
than was anticipated. The downturn in traffic in 07-
08 coupled with the rupiah depreciation, where it fell
25 percent ag ainst the dollar, and of course fuel costs,
all played their part in compromising our financial
ability to ser vice our debt. While we had a number
of new revenue streams working well, the historic
financial baggage was impeding our ability to trade.
The breathing sp ace that Chapter 11 has given us has
a llowed us to re-structure some US$80 million, provide
a viable way for ward and build a strong , viable brand.
Q: You have made significant strides
by passing the IATA Operational
Safety Audit. How was this – and
Mandala’s subsequent removal from
the EU blacklist – achieved?
AHM: The introduction of the Airbus fleet provided
an opp ortunity to build a culture based on safety and
operational excellence. We knew that with the legacy
safety issues in Indonesia it was imperative that we build
a core based on safety – and with this commitment came
heavy investment. The commitment at all levels of the
airline has been outstanding and is the reason why we
achieved IATA Safety Audit recognition.
Q: With the Indonesian market
growing at 14 percent per annum,
have you experienced any problems
in recruiting enough qualified
personnel to meet the growth
AHM: We have been fortunate and have not had any
problems in attracting and retaining staff. I can se e
that there is a looming issue where unless the pilot
training area is addressed , there will be a shortfall in
numbers and inevitable rise in salaries and poaching
from the smaller airlines.
The domestic market in Indonesia is growing at a
staggering rate. At this point, the numbers of carriers
are limited, which provides great opportunity for well-
structured carriers to grow their revenue in line with
the market. At the same time, India is also growing at
a similar pace. Mandala Airlines would like to be a key
component in exploiting this potential
Mandala President Director Diono Nurjadin with Airbus Chief Operating
Officer Customers John Leahy on the announcement of the carrier’s A320
order in 2007.
“Our restructuring plans have gone well and we are in discussion
with our potential investors on a relaunch strategy.” – Manadala
Airlines Chief Commercial Officer Adrian Hamilton-Manns
30/09/11 11:18 PM
Links Archive AAV September 2011 AAV November 2011 Navigation Previous Page Next Page