Garuda in talks with ANA, Ryanair on Citilink investment

Hong Kong
This story is sourced from Pro
See more Pro news »

Garuda Indonesia is in talks with carriers, including All Nippon Airways (ANA) and Ryanair, regarding a possible partnership in its low-cost arm Citilink, sources close to the discussions say.

They add that the new partner could take up to a 30% stake in Citilink, and that Garuda could also offer some of its current investors a stake in the low-cost carrier.

Garuda is evaluating its options, and a decision could be made as soon as next month, the sources add.

In May, Citilink chief executive Arif Wibowo told Flightglobal Pro that the carrier is in search of a "strategic investor" that can contribute financially and share low-cost management expertise with the airline.

He added that the potential investor will be an established foreign carrier, likely from the US or Europe, that does not compete directly with Citilink.

ANA could be a possible partner because it has experience in the low-cost segment with its investment in Peach Aviation and the soon-to-be-launched Vanilla Air, sources say. The carrier has also been "very aggressive" with its plans to invest in aviation-related businesses in the region, they add.

ANA Holdings said earlier this year that it would pursue strategic investments in aviation-related businesses as part of a new corporate strategy. The carrier has announced a $25 million investment in Myanmar's Asian Wings Airways, subject to government and shareholders' approval, and is also said to be in talks with San Miguel Corporation in relation to a possible partnership in Philippine Airlines.

Citilink's decision to source for an investor comes after the carrier posted a net loss of $28.4 million in 2012. It is also facing strong competition from carriers such as Lion Air and Indonesia AirAsia, which have much larger growth plans.