Garuda Indonesia Merger with InJourney Moves Forward

5 months ago Editor

Garuda Indonesia is set to merge with InJourney once its financial health improves, according to CEO Irfan Setiaputra. The merger aims to bolster the state-owned tourism holding company, PT Aviasi Pariwisata Indonesia, but hinges on Garuda achieving positive equity.

Garuda Indonesia‘s CEO, Irfan Setiaputra, confirmed that the merger with state-owned tourism holding company InJourney is still in the pipeline, pending the airline’s financial recovery. Addressing the Indonesian House of Representatives, Setiaputra emphasized that the merger would proceed once Garuda’s equity turns positive to prevent burdening InJourney.

“There was consideration that Garuda should join InJourney once its equity becomes positive to avoid burdening InJourney,” Setiaputra stated during the July 3 hearing in Jakarta. He noted that discussions are ongoing regarding the merger’s model, timing, and integration process.

Plans for the merger are not new, but Garuda’s financial woes have delayed the integration. The airline, burdened with around USD9.8 billion in debt, entered into the Debt Payment Obligation Postponement (PKPU) process in late 2021. A year later, it exited the process after reducing its debt to about USD5.1 billion and restructuring its operations. However, as of March 31, 2024, Garuda’s negative equity stood at USD1.33 billion, a slight increase from the previous year. Despite this, the airline is optimistic, reporting a 40% revenue increase in 2023 while costs only rose by 4%.

In related news, Singapore’s Competition and Consumer Commission has conditionally approved a joint venture between Garuda and Singapore Airlines. This agreement allows for revenue-sharing on flights between Indonesia and Singapore and offers reciprocal benefits for frequent flyer members. Both airlines have agreed to maintain seat capacity on key routes and ensure compliance through an independent auditor.

“We are very pleased to receive this approval,” said Setiaputra. “Having regulatory approval as the first step in a commercial agreement will provide more opportunity for developing well-executed strategic ideas.”

This merger and partnership are seen as pivotal steps in strengthening Garuda’s financial position and expanding its strategic reach in the aviation industry.