Response from the President Director of Garuda Indonesia Regarding the Merger Plan with Pelita Air

Dream - President Director of PT Garuda Indonesia Tbk Irfan Setiaputra welcomes the plan for the merger of Garuda Indonesia, Citilink, and Pelita Air. This news was previously revealed by Minister of SOEs Erick Thohir.

Irfan stated that the merger plan is still in the early stages. They are currently exploring various business synergy opportunities to optimize performance profitability. They also aim to strengthen the business ecosystem of the air transportation industry in Indonesia.

"We can inform you that the discussion process regarding the exploration of corporate actions is still ongoing intensively," said Irfan as quoted from Merdeka.com, Wednesday, August 23, 2023.

The merger plan is a positive signal for strengthening the fundamental performance of Garuda Indonesia. Especially after the ongoing restructuring through various accelerated performance transformation steps with Indonesian aviation industry players.

"The merger is a positive signal for strengthening the fundamental performance of the company, especially after the restructuring," said Irfan.

Regarding the follow-up on more specific explorations for the realization of the strategic plan, they will continue to provide ongoing information to the public.

Why is Erick Thohir Planning to Merge Garuda Indonesia, Citilink, and Pelita Air?

Dream - Minister of State-Owned Enterprises (SOEs), Erick Thohir, plans to merge three domestic airlines, namely Garuda Indonesia, Citilink, and Pelita Air.

"We are also working on the merger of Pelita Air, Citilink, and Garuda to reduce costs," said Erick in his statement, as quoted from Merdeka.com, Tuesday, August 22, 2023.

The reason for the merger is part of the efficiency process to reduce logistics costs. For Erick, efficiency within SOEs continues to be a primary agenda for the state-owned companies he leads.

"After implementing a series of efficiency programs for four Pelindo companies," said Erick.

Indonesia Still Lacks Aircraft due to Logistics Costs

Erick revealed that Indonesia still lacks about 200 aircraft in the aviation business, one of the reasons being the high logistics costs.

This calculation is obtained from the comparison between the United States and Indonesia. In the United States, there are 7,200 aircraft serving domestic routes with a market share of 300 million population.

In Uncle Sam's country, the average GDP (per capita income) reaches $40,000. Meanwhile, in Indonesia, with a population of 280 million, the GDP is $4,700.

"That means Indonesia needs 729 aircraft. However, currently, Indonesia only has 550 aircraft. So, our logistics is not yet in line," said Erick.

Through this merger plan, he hopes that logistics costs in Indonesia will continue to decrease. Thus, it will enhance the competitiveness of the domestic business world.

"SOEs continue to reduce logistic costs. Pelindo has gone from 4 (companies) to 1. Previously, logistic costs reached 23 percent, now it's 11 percent. We are also working on the merger of Pelita Air, Citilink, and Garuda to reduce costs," said Erick.