Adam Air - Warnings and Subsequent Shutdown

Warnings and Subsequent Shutdown

On March 16, 2007, the Indonesian government announced plans to shut down an unspecified Indonesian air carrier. Although no details were immediately released, it was revealed that the airline had had a string of recent accidents, making Adam Air the most likely candidate. One official from the airline, speaking anonymously as he was not permitted to speak to the press, said that Adam Air was "prepared for the worst." It was announced on March 22 that Adam Air was one of seven airlines that would have their licenses revoked within three months unless they could improve their safety standards. The other six airlines involved were Batavia Air, Transwisata Prima Aviation, Tri-MG Intra Asia Airlines, Manunggal Air Services, Jatayu Airlines and Kartika Airlines. All fifty-four of Indonesia's airlines were told to make some improvements.

It was reported on June 28, 2007 that Adam Air would escape shutdown and had upgraded its safety rating to the middle tier. The airlines that lost their licenses were Jatayu Gelang Sejahtera, Aviasi Upataraksa, Alfa Trans Dirgantara and Prodexim and airlines that were grounded pending improvements and facing potential licence revocation were Germania Trisila Air, Atlas Delta Setia, Survey Udara Penas, Kura-kura Aviation and SMAC.

As reported on the local news, Adam Air reduced many of its flights. Adam Air decreased its frequencies to only several flights departing both from Jakarta Airport and Surabaya Airport.

On 16 March 2008, Adam Air was given 21 days by the Indonesian government to decide whether to close down after safety concerns prompted an investment group to unload its 50 percent stake in the airline. The following day, the president of Adam Air announced that more than half of the fleet had been seized after the airline defaulted on payments.

"Out of 22 planes, now we only have 10 because 12 of them have been declared in default. The other 10 have been declared in default as well, but I'm still trying to work out a way to restructure the payments," Adam Suherman was quoted as saying.

On 18 March 2008, after the accident at Batam, In which a Boeing 737 skidded off the runway while landing, the Indonesian government suspended the airline's Air Operator Certificate. The airline was not allowed to fly and had three months to show safety improvements. On 18 June 2008 the Indonesian authorities definitively revoked Adam Air's AOC, banning it from flying permanently.

However, the company had been in financial trouble even before the government's decision to shut it down, mostly due to mismanagement. The company's owner (Sandra Ang) had been allegedly embezzling the company's money. The financial losses from the embezzlement reportedly amounted to Rp 2.1 trillion (approximately US$210 million). On August 12, 2008, the Indonesian police named Sandra Ang as a suspect for money embezzlement. She was also barred from leaving the country by immigration.