Indonesia reviews plan to merge Garuda Indonesia and Pelita Air

The Indonesian government is reviewing a plan to merge Garuda Indonesia and Pelita Air, a unit of energy firm Pertamina, to ensure affordable airfares.

This comes a year after Garuda reached an agreement with its creditors to restructure its US$9 billion debt.

The possible merger could strengthen the aviation industry in Indonesia

Plans to merge both state-owned airlines are still ongoing, said Garuda Indonesia director Irfan Setiaputra in his official statement on Tuesday.

“The development plan is still at an early stage,” he added, explaining that the government is exploring various business synergy opportunities in order to optimise performance profitability while strengthening the business ecosystem of the aviation industry in Indonesia.

Furthermore, Irfan disclosed that this is also a positive signal for efforts to strengthen the company’s performance fundamentals, especially after the restructuring.

“Therefore, we will certainly continue to communicate the projections of this merger process on an ongoing basis, in case there is a more specific follow-up assessment of the realisation of the strategic plan.”

The possible merger would “strengthen the aviation industry” and ensure affordable ticket prices, remarked Dendy Kurniawan, president director of Pelita Air. It would also increase the number of airplanes in Indonesia.

Citilink, a subsidiary of Garuda Indonesia, however, will remain as is with no plans to merge, stated a source from Indonesia’s state-owned enterprises (SOEs).

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