State own enterprises (SOEs) minister, Erick Thohir, spin-off subsidiaries of flight carriers, PT Garuda Indonesia Tbk (IDX: GIAA), as consequence of the formation of tourism holding - Photo by AP II Office

JAKARTA (TheInsiderStories) – State own enterprises (SOEs) minister, Erick Thohir, separated subsidiaries of flight carriers, PT Garuda Indonesia Tbk (IDX: GIAA), as consequence of the formation of tourism holding. Based on the ministry’ draft, there are four clusters that will be formed to strengthen tourism holding

The clusters are airlines, airports, destination management, also the aviation and logistic service. Later, the issuer’ unit will become member of the new clusters, which will be formed in the second phase of the portfolio restructuring plan carried out during 2021 – 2022

Garuda‘ subsidiary transfer to the destination management cluster is PT Aerowisata. The company engaged in hospitality industry and established on June 30, 1973. Then, PT Garuda Indonesia Holiday France S.A.S, operate since Dec. 23, 2013 as a strategic business unit (SBU) of the company.

Other subsidiaries that will be included in the aviation and logistics service cluster is PT Gapura Angkasa, Garuda Indonesia Kargo SBU, aircraft maintenace firm PT Garuda Maintenance Facility Aeroasia Tbk (IDX: GMFI), and Aero Express (PT Aerojasa Cargo).

However, in the midst of the plan to form the new holding, the issuer and other members have not yet recovered. In nine months, Garuda recorded a loss $1.07 billion and the revenues of $1.14 billion, fell sharply by 67.79 percent from the same period of last year valued of $3.54 billion.

Other state-run companies will join in the new holding are PT Pengembangan Pariwisata Indonesia (ITDC), PT Angkasa Pura I and II, and PT Hotel Indonesia Natour. CEO of the company, Irfan Setiaputra, expect post-integration, its hoped that his company will get benefit from the merger program and more easily receive funds from the government.

While, deputy minister for SOEs, Kartika Wirjoatmodjo targeted, the establishment of the tourism and aviation holding completion in 2022. In detail, he explained, during 2021 to second quarter of 2022, the ministry will carry out portfolio restructuring and after that to the new holding effective.

“I just had a discussion about holding aviation and tourism. We will integrated Garuda, Angkasa Pura, ITDC, HIN into one holding,” he stated on Sept. 16,

As known, Garuda has financial problems and has fired 700 employees with contract labor status as of Nov. 1, as a decline in flight service demands during the pandemic. He said, the employees reduction is part of a strategic step taken by the company to improved the future of the company’ business.

“Beyond our estimates, this pandemic condition has a long-term impact on the company’s performance, which until now has not shown significant improvement,” Setiaputra stated.

To help the airlines financial performances, currently Garuda has announced to issue Mandatory Convertible Bonds (MCB) amounting to Rp8.5 trillion (US$607.14 million). After the corporate action, the government ownership will rises from 60.5 percent to 84.8 percent.

The conversion will be carried out into new Series B shares with the conversion price based on 90 percent of the average closing price for a 25 days periods from Oct. 13, 2020, stood at Rp206 a share. The company targeting to request an approval from the shareholders on Nov. 20. 

US$1: Rp14,000

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