JAKARTA (TheInsiderStories) – PT Garuda Indonesia Tbk (IDX: GIAA), a state-owned flight carrier, will acquire at least 51 percent shares of private airlines provider PT Sriwijaya Air, said government official today (04/16). The acquisition plans its expected could be done this year.
“The acqusition through debt to equity swap. We expect the deal will finalize this year,” said Gatot Trihargo, deputy for State Own Enterprises (SOEs) Minister in Jakarta.
Sriwijaya Air has debts around Rp433 billion (US$30.93 million) for aircraft maintenance to Garuda. Cause of the debt problems, since Nov. 15, 2018, Garuda Indonesia, through its subsidiaries PT Citilink Indonesia, took over the operational management of Sriwijaya Air and PT NAM Air. The agreement has been signed on Nov. 9, 2018.
According to the CEO Ari Askhara, this partnership aims to improve the operations and the financial problems of Sriwijaya Air, including to help its fulfill commitments or obligations to a third party. Through this partnership, he said, Citilink have an ability to synergyse and expand its market segment, network capacity, its versatility, as well as speeding up the restructuring of the settlement obligations of the Sriwijaya under the Group.
“This step is a strategic step to help Garuda Indonesia Group synergies and Sriwijaya Group in managing passenger air transport market share to 51 percent,” he said.
President Director of Sriwijaya Air, Chandra Lie believed Garuda has a very good capability in managing business Airline and having the Alliance also could reaffirm position Citilink Indonesia and Sriwijaya Air in domestic market.
Earlier, Garuda Indonesia and Sriwijaya Air already doing cooperation in the form of a ‘code share’ flights that will meet the domestic market share in Indonesia more than 50 percent. The code share could maximize the capacity of aircraft by combining 104 Garuda’s aircrafts and 58 Citilink’s aircrafts.
By this cooperation, the route also could be developed not only the routes traversed by Garuda, but can also be extended by using the routes of Sriwijaya Air.
Code share cooperation is carried out by combining flights owned by both airlines. Through this cooperation, Garuda Indonesia and its unit will place the flight number on the code of flight with Sriwijaya or NAM Air and vice versa.
Recently, State Own ministry reviewed to set up aviation holding under PT Survai Udara Penas, an airlines operator owned by government the Defense ministy. The planned, the ministry will transfer Garuda Indonesia, PT Angkasa Pura I and II , PT Pelita Air (owned by oil & gas holding PT Pertamina) shares to the new holding.
by Linda Silaen, Email: firstname.lastname@example.org