State-Owned Enterprises Minister Confirms Merger of Three Airlines Is Being Prepared
Erick Thohir, Indonesian Minister of State-Owned Enterprises, confirmed that a merger is being planned between three state-owned airlines, namely: (1) Garuda Indonesia, (2) Citilink Indonesia, and (3) Pelita Air. This corporate action is targeted to be completed before the end of 2025
Minister Thohir said this merger was put on the ministry's agenda (road map) for the next six months, adding that a meeting has already taken place between his side and the president directors of the three involved airlines (Garuda Indonesia's Wamildan Tsani Pandjaitan, Citilink Indonesia's Dewa Kadek Rai, and Pelita Air's Dendy Kurniawan) as well as state-owned airport operator InJourney Airports and state-owned air navigation company AirNav Indonesia.
At the meeting other topics were discussed as well, such as air accidents that happened in other countries recently (including the crash in South Korea) but also preparations for the expected increase in air travel demand in the context of Idul Fitri celebrations (in April 2025).
Citilink Indonesia is a subsidiary of Garuda Indonesia, while Pelita Air is a subsidiary of state-owned energy giant Pertamina.
The reason for this merger would be efficiency. Typically, mergers and acquisitions result in pooled resources (combined assets), reduced costs, and stronger financial backing, which can improve credit ratings and lower borrowing costs.
A question is whether the three airlines will keep their individual identities in case the merger materializes, or whether they will get one general identity? And, secondly, whether it will affect their core business as each airline serves a different market segment? For example, Citilink Indonesia and Pelita Air are known for being low-cost airlines while Garuda Indonesia serves the higher market segments.
In recent years, Garuda Indonesia faced heavy challenges, particularly due to the government restrictions that were imposed in the context of the COVID-19 crisis in 2020 and 2021. The table below shows that its net loss was recorded at USD $2.44 billion in 2020, followed by USD $4.16 billion in 2021. Garuda Indonesia completed a massive debt restructuring program in 2022, allowing the company to turn around to profit.
Financial Highlights of Garuda Indonesia (in USD million):
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Total Assets | 4,455.7 | 10,790.0 | 7,192.7 | 6,235.0 | 6,727.6 |
| Total Liabilities | 3,873.1 | 12,733.0 | 13,302.8 | 7,770.1 | 8,010.4 |
| Operating Revenue | 4,572.6 | 1,492.3 | 1,336.7 | 2,100.0 | 2,936.6 |
| Net Profit/Loss | 38.9 | (2,443.0) | (4,159.3) | 3,737.9 | 250.0 |
Source: Garuda Indonesia - Annual Report 2022
Financial Highlights of Garuda Indonesia (in USD million):
| Q3-2023 | Q3-2024 | |
| Total Assets | 6,727.6 | 6,506.6 |
| Total Liabilities | 8,010.4 | 7,917.0 |
| Operating Revenue | 2,233.2 | 2,562.0 |
| Net Profit/Loss | (72.4) | (131.2) |
Source: Garuda Indonesia - Quarterly Report Q3-2024