Garuda Group's merger with Pelita Air potentially completed this year
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Investor Daily - Merger Grup Garuda dan Pelita Air berpotensi rampung tahun ini
29 September 2023
By: Muawwan Daelami
Jakarta - The merger of the subsidiary of PT Garuda Indonesia Tbk (GIAA), Citilink, with the subsidiary of PT Pertamina, Pelita Air, is predicted to be realised at the end of this year. According to the latest development, the State-owned Enterprises (SOE) Ministry is currently formulating a project management office (PMO) team to handle the merger.
Garuda Indonesia President Director Irfan Setiaputra revealed that his company was asked to set up a PMO team until 31 December 2023. “During the period, if we agree with everything [then the merger can be completed],” Irfan said recently.
Irfan added that the company would consider all factors, including legal matters, the transaction value, implications for both companies, and the debt issue. No matter what, merging means considering all factors. “The cost is also considered. The people involved are also considered,” he stated.
By integrating Citilink and Pelita Air, he hopes that state-owned airlines can collaborate rather than compete in the same market. “So, we will still discuss the form. We do not want to be reckless as there are many impacts on our finances, legal [obligations], debt, and employees. We do not want to rush. Hence, we will hold a meeting two times a week with Pelita and Pertamina,” Irfan revealed.
Collaboration
In the future, he continued that Garuda would open itself to collaborate with other airlines, not only SOEs but also private companies.
It has been proven by Garuda by collaborating with Capital A, which is operating as Air Asia.
In the partnership, both parties agree to cooperate in three business lines, namely interline, cargo logistics, and maintenance repair and operation (MRO). Until now, cooperation has been established in the three business lines.
However, the collaboration will also produce profit, so it will also positively impact the company’s revenue. Moreover, Irfan wants the company to have a positive performance throughout this year.
“We have not planned to establish a joint venture (JV) with Air Asia. So, only the operational side. No investment. So, we will operate together,” Irfan emphasised.
The cooperation initiative is tightly related to the Covid-19 pandemic that has taught a lesson not to compete against each other. For Irfan, there are areas where the company must collaborate, not compete.
“So, with this cooperation, Garuda, Citilink, and Air Asia will still compete on routes where they all fly, such as Jakarta-Kuala Lumpur. However, if there is a passenger of Citilink who want to go to a city from Kuala Lumpur that is not served by Garuda, the interline cooperation will come into play. Next, it will lead to codeshare,” Irfan explained.
Moreover, he leaked that codeshare would occur in several days. “Further cooperation is inevitable. We will look for the meeting point,” Irfan said.
Rapid process
Air Asia CEO Tony Fernandes admits that the realisation of the cooperation between Capital A and Garuda was quick. It can be achieved as both parties share a similar perspective. “I asked to meet with Irfan to cooperate. In the next couple of weeks, we met in Singapore. We have similarities in terms of efficiency, simplicity, and humility. So, we agreed to collaborate in no time,” Tony revealed.
Tony believes that Asean countries have a large potential, so the region must collaborate closer. Hence, he truly enjoys his cooperation with Garuda that provides more options for passengers from Malaysia and Indonesia.
“So, the cooperation makes me happy. I think that we will see more cooperation at the end of this year or next year. It is the first time in history,” he said.
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