JAKARTA, 30 December 2005 - Reports from Indonesia say the government is planning to sell its struggling state airline, Garuda. Kompas newspaper has quoted the minister for state enterprises, Sugiharto, as saying that Garuda is planning an initial public offering in 2009. However, he added the process may be sped up so that investors can enter as early as next year.

High oil prices and competition from other airlines are causing problems for Garuda.

"It's best to start in 2006 as many investors are interested," he said. Garuda is struggling to stay in business amid rising fuel costs and tougher competition. It is also having difficulty servicing debt repayments of $US100 million a year and had to ask foreign creditors to reschedule the annual principle payment on a debt of more than $500,000.

Our correspondent in Jakarta, Peter Cave, says Garuda has also suffered a defection of more than 120 pilots in the past two years after they were lured away by better paying jobs at competing low cost carriers.

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