AirAsia Intends to Acquire Citilink Shares from Garuda Indonesia
(Left to right) Airbus CCO Eric Schulz; AirAsia X Chairman Tan Sri Rafidah Aziz; AirAsia Chairman and AirAsia X Group CEO Datuk Kamarudin Meranun at the Commercial Announcement with Airbus held at 2018 Farnborough Airshow - Photo by AirAsia

JAKARTA (TheInsiderStories) – The Indonesian flight carriers, PT AirAsia Indonesia Tbk (IDX: CMPP), claimed to intend to acquire shares of domestic airline PT Citilink Indonesia from the ownership of PT Garuda Indonesia Tbk (IDX: GIAA), and was not interested in establishing operational cooperation, said the senior officer last week.

Although it has not officially announced how many shares are planned, AirAsia has shown its commitment to establish cooperation in the field of Indonesian aviation services by acquiring the Low Cost Carrier (LCC) airline shares.

AirAsia claims that apart from being both the LCC airline, the two airlines have similarities, including that AirAsia is strong at the international level, while Citilink is strong in the domestic market.

In addition, the two airlines also use the same type of Airbus A32, as well as the same pilot, cabin crew rating and parts and maintenance.

Previously, Garuda Indonesia offered operational cooperation to AirAsia and not to acquire its subsidiary so that both parties were equally profitable.

But, AirAsia management refused to cooperate with the “operational cooperation” scheme, as carried out between Garuda Indonesia and the Sriwijaya Group (Sriwijaya and NAM Air) and was more interested in owning a half shares of the State-Owned Enterprises (SOEs) company.

However, Garuda Indonesia is still opening the door of partnership if both parties reach an agreement while waiting for an official proposal from AirAsia

The good performance of Citilink airlines throughout 2018 is the main reason for AirAsia to annex this state company. Throughout 2018 Citilink managed to record a load factor of up to 80 percent which lasted for the first 2 months of 2019.

President Director of Citilink Indonesia Juliandra Nurtjahjo stated that Citilink had flown 15 million passengers during 2018, up 22 percent compared to the previous year with 12.3 million passengers.

“For 2019, Citilink Indonesia is also optimistic that it can reach the target of transporting 18 million passengers by the end of 2019,” he said in Jakarta, on Monday (03/04).

According to him, Citilink Indonesia has also flown 15 million passengers during 2018, up 22 percent compared to the previous year with 12.3 million passengers and increasing its production volume growth by 17 percent in 2018 compared to 2017.

“In 2018, Citilink recorded the second highest market share in the LCC class of 14.29 percent, an increase of 12.62 percent from 2017,” he said.

According to data from the Center for Aviation (CAPA), Citilink is the second largest LCC airline in Indonesia with a fleet of 61 aircraft. While for On Time Performance Citilink for January – February 2019 was recorded at 91.7 percent.

This year, Citilink targets a total fleet of 70 aircraft consisting of Airbus A320, ATR 72-600 and several wide body aircraft.

Furthermore, Nurtjahjo stressed that there had been no directives from Citilink’s shareholders, both Garuda Indonesia and the Ministry of SOEs to collaborate with strategic partners in business development for their long-term plans.

Previously, Garuda Indonesia Group, through its subsidiaries PT Citilink Indonesia, took over the operational management of PT Sriwijaya Air and PT NAM Air on Nov. 9, 2018 to improve the operations and the financial problems of Sriwijaya Air, including to help its fulfill commitments or obligations to a third party.

So far, the cooperation have an ability to synergize and expand its market segment, network capacity, versatility, as well as speeding up the restructuring of the settlement obligations of the Sriwijaya under the Group.

Written by Daniel Deha, Email: Daniel@theinsiderstories.com