PT Garuda Indonesia Tbk (IDX: GIAA) considered to convert other airlines company, Sriwijaya Air' debt into shares - Photo by the Sriwijaya Group

JAKARTA (TheInsiderStories) – Flight carrier, PT Garuda Indonesia Tbk (IDX: GIAA) considered to convert other airlines company, Sriwijaya Air’ debt into shares, it said on Thursday (10/10). The state-owned company claimed the conversion aims to provide the best benefits for both parties.

Currently, Sriwijaya Air has a debt around Rp810 billion or US$57.44 million to Garuda’ subsidiary, PT Garuda Maintenance Facility Aeroasia Tbk (IDX: GMF). Before making the conversion, said the management, Garuda and Sriwijaya Group were focusing on negotiations to perfect and improve the cooperation.

Since January 2019, both parties has collaborated with five strategic partners under the auspices of Garuda, including PT Gapura Angkasa, PT Aerofood Indonesia, PT Aerotrans Service Indonesia, PT Aero Globe Indonesia, and PT Aerojasa Cargo. According to the CEO of Sriwijaya Air’ Joseph Adriaan Saul said that this collaboration was a strategic step that was believed to improve the quality of service of the flight carrier.

End of October 2018, Sriwijaya Air has trillions rupiah of debt to several SOEs with total value Rp2.46 trillion. In addition to GMF Aeroasia, the company also has debts to energy producer PT Pertamina of Rp942 billion, state lender PT Bank Negara Indonesia Tbk (IDX: BBNI) of Rp585 billion, airport operator PT Angkasa Pura I Rp50 billion, and PT Angkasa Pura II Rp80 billion.

Currently, Garuda through its subsidiaries PT Citilink Indonesia, took over the operational management of Sriwijaya Air and NAM Air. “This step is a strategic step to help group synergies and Sriwijaya Group in managing passenger air transport market share to 51 percent,” said Garuda’ CEO Ari Askhara

While, 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 his company in domestic market.

Earlier, the aviation companies already doing cooperation in the form of a ‘code share’ flights that will meet the domestic market share in Indonesia more than 50 percent. Through this cooperation, Garuda  and its unit will place the flight number on the code of flight with Sriwijaya  or NAM Air and vice versa.

As quoting by local media, the state own enterprises (SOE) ministry ensured that Garuda would acquire Sriwijaya Air shares. The deputy minister, Edwin Hidayat Abdullah said, Chandra Lie and the management had given a positive response related to the acquisition plan. At present, the state-owned airline is calculating the Sriwijaya Air’ stock valuation for the acquisition process.

US$1: Rp14,100

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