The Indonesian government is planning to merge Garuda with tourism companies

Published on : Tuesday, November 3, 2020

The Indonesian government has recently defined its plan to merge with nine state-owned companies of tourism including flag carrier Garuda Indonesia. It’s being expected that this move will maximize operational efficiencies.

The state-owned enterprises in Indonesia ministry have explained that the nine entities will be come together under and become one holding company.

Besides Garuda Indonesia, other state-owned enterprises that will be merged in this plan include airport operators Angkasa Pura I (AP1) and Angkasa Pura II; hotelier Inna Hotels and Resorts; Sarinah, the departmental store also includes in this list.

The new holding company is expected to encourage different enterprises to put into practice cross-sector campaigns, therefore increasing competitiveness and fortifying funding capacity. The ministry expects that this would improve tourism performance in the long run.

Also, each enterprise has been requested to create team that would work out on the best way to collaborate and cooperate with one another. Detailed information on the exact timeline of the new company is limited, with a suggestion that the legal framework could work out next year.

The travel industry has been significant to the economy of Indonesia and it has been hit majorly by the fall down in demand stemming from the virus outbreak.

For example, Garuda, for the six months sunk deep into the red which ended on 30thJune, reporting an operating loss of $726 million as its revenue faded away from massive drop in demand.

A Nikkei Asia report states that the step to amalgamate Garuda into one holding company will make matters simple for the state, which owns 60% of Garuda, to direct funds to the troubled carrier.

The Jakarta Post for the meantime, explains that Garuda president, Irfan Setiaputra as saying that folding Garuda into a holding company will make the airline operate easily and restructure its debt.

The move has earned full support of at least one state-owned enterprise, with AP1 mentioning that its ready to join the new holding company.

AP1 president director Faik Fahmi says the enterprise will “take an active role in every planning process”, including planning for “route synergies between airports and airlines”.

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