Projected Merger: How Will Garuda, Citilink, and Pelita Air's Finances Fare?

The Minister of State-Owned Enterprises (SOEs), Erick Thohir, is proposing a merger of three state-owned airlines: Garuda Indonesia, Citilink, and Pelita Air.

Erick stated that this plan aims to improve the efficiency of domestic logistics costs. The merger proposal is based on the successful cost efficiency achieved in maritime logistics following the merger of four Pelindo companies in 2021.

According to Erick's calculations, Indonesia is still short approximately 200 aircraft. To address this shortage, he hasn't ruled out the possibility of merging the three SOE airlines to reduce logistics costs.

"SOEs continue to strive to reduce logistics costs. Previously, logistics costs reached 23%, now they are down to 11%. We are also working towards a merger of Pelita Air, Citilink, and Garuda to reduce costs," Erick said, as reported by *Katadata* on Wednesday, August 23, 2023.

Garuda Indonesia's CEO, Irfan Setiaputra, stated that the company supports the proposed merger with Pelita Air. Citilink is currently a subsidiary of the Garuda Indonesia Group, while Pelita Air is a subsidiary of Pertamina.

"We can confirm that discussions regarding the exploration of this corporate action are still ongoing intensively," said GIAA CEO Irfan Setiaputra in an official statement on Tuesday, August 22, 2023.

So, what is the financial condition of these three airlines?

In its latest report, Garuda Indonesia recorded a loss of US$76.5 million or Rp1.16 trillion in the first half of 2023 (assuming an exchange rate of Rp15,246 per US$).

This contrasts sharply with the same period in 2022, which recorded a net profit of US$3.76 billion or Rp57.32 trillion.

However, the company, with the stock code GIAA, actually experienced a 58.54% year-on-year (yoy) increase in revenue. Total revenue reached US$1.39 billion or Rp21.19 trillion in June 2023, compared to US$878.69 million or Rp13.39 trillion previously.

(See also: Garuda Indonesia Still Records Rp1.16 Trillion Loss in First Half of 2023)

For Citilink, based on its last official financial report in 2021, it recorded a net loss of US$357 million or Rp5.44 trillion. Citilink also consistently recorded losses in 2020, amounting to US$306.83 million or Rp4.67 trillion.

Its revenue in 2021 was US$433.1 million or Rp6.6 trillion.

In contrast, Pelita Air reported a net profit of US$2.15 million or Rp32.77 billion in 2021. The year before, it also recorded a profit of US$732,000 or Rp11.16 billion.

Pelita Air's revenue in 2021 was US$52.06 million or Rp793.72 billion.

(See also: Garuda Shares Soar Amidst Planned Merger with Citilink and Pelita Air)