Indonesia transport ministry softens tone on airlines equity rule

[JAKARTA] Indonesia's transport ministry said on Thursday it will work closely with the airlines that do not meet a July 31 deadline to improve their finances and will then decide the next step.

The ministry had previously said that 13 airlines including the Indonesian affiliate of Malaysian carrier AirAsia Bhd were found to have "negative equity" and must turn it positive by the end of this month.

Transport ministry spokesman J.A. Barata said on Tuesday that it will suspend the license of any airline that does not meet the deadline.

However, the ministry's news release on Thursday does not mention a possible suspension. Instead, it said it will ask the airlines to present their business plan and it will "help and support" the airlines to improve its finances.

The ministry did not give further details.

AirAsia shares had fallen more than 15 per cent on Wednesday on worries that its Indonesian affiliate would be grounded.

REUTERS