Indonesia's Mandala Airlines back in business

Budget carrier Mandala Airlines resumed operations on Thursday, marking its return to Indonesia's aviation scene more than a year after being grounded due to huge debts.

Mandala ceased operations in January 2011, weighed down by a debt load of 800 billion rupiah ($88 million).

The airline was able to return to the skies after completing a financial restructuring in which Singapore budget carrier Tiger Airways became a key investor.

Mandala launched its inaugural flight from Jakarta to the Indonesian city of Medan on Thursday morning, spokeswoman Astriana Ekasari told AFP.

The airline currently has two A320 aircraft, but "we plan to operate 10 aircraft by the year-end", she said.

Medan has announced two new international routes -- Medan to Singapore and Jakarta to Kuala Lumpur -- which start later this month and in May respectively.

The international routes will put Mandala in direct competition with budget carriers AirAsia and Indonesia's Lion Air, which formalised a record $22.4 billion deal for 230 aircraft with US aircraft maker Boeing in February.

More routes are expected to be added over the next few months as Mandala rapidly expands its fleet of Tiger-sourced Airbus A320s.

Tiger now owns 33 percent of Mandala, while Indonesian investment company Saratoga Group holds a majority 51.3 percent stake. The remaining 15.7 percent is owned by Mandala's previous shareholders and creditors.

Air travel has grown sharply in recent years in Indonesia with the emergence of budget carriers as well as rising incomes as a result of steady economic growth.

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