PT Garuda Indonesia Tbk (IDX: GIAA), state-owned flight carrier, and PT Sriwijaya Air agreed to extend the interim agreement for the next three months, said the senior official on Thursday (07/11) - Photo by NAM Air

JAKARTA (TheInsiderStories)PT Garuda Indonesia Tbk (IDX: GIAA), state-owned flight carrier, and PT Sriwijaya Air agreed to extend the interim agreement for the next three months, said the senior official on Thursday (07/11). The decision has been taken after the chaos between the two parties.

“A temporary agreement was extended for three months, but revisions were immediately undertake if needed,” coordinating minister for maritime and investment Luhut Binsar Panjaitan told reporters after met with all parties at his office.

Sriwijaya’ lawyer Yusril Ihza Mahendra, confirmed that there was a dispute between the company and Garuda. This happened because there was no clarity on the initial agreement made a year ago.

According to him, in carrying out the deal, Garuda was dominated and intervened Sriwijaya’ operations rather to helped the airlines operator be able to pay debts to the state-owned companies.

He gave an example a disadvantage of the collaboration like aircraft maintenance, which was originally carried out on its own, but now it is handled by PT Garuda Maintenance Facility Aeroasia Tbk (IDX: GMFI), unit of Garuda, and making the costs more expensive.

In addition, the flight crew inn that was originally placed in a dormitory moved to the hotel. This actually made Sriwijaya Air’s debt grow bigger under Garuda’ management, he noted.

Moreover, Mahendra explained, through this collaboration, Garuda implemented a management fee 50 percent and a profit sharing of 60 percent of the company’ gross income. He stated, “This certainly can make Sriwijaya Air collapse.” 

After the meeting, he explained, both parties agreed to extend the temporary agreement and the service would be carried out as usual. Paralling, both parties will revise the contents of the agreement, such as the directors composition of Sriwijaya and flight routes between the two operators.

Minister of transportation, Budi Karya Sumadi, assured that the his ministry will take measurement steps to solve this problem so there will be no further negative impact to the customers.

Reported by Lexy Nantu, Written by Staff Editor, Email: theinsiderstories@gmail.com