Indonesia’s largest state-owned carrier Garuda Indonesia is to ask the government for a financial bail-out, although the minister for state enterprise has floated the idea of merging the airline with the country’s two other state-owned carriers.

Garuda, which has debts totalling $827 million, says it lost around 811 billion rupiah ($84 million) in 2004 and “it is right” that a financial bail-out is to be sought.

The carrier says it is working on the proposal, but at this stage declines to reveal details.

Garuda’s move comes after executives at Merpati Nusantara, another state-owned carrier, disclosed that the government has agreed to give it $50 million in financial aid.

Merpati plans to use the money to manage debts, fleet renewal and for a company restructuring. Merpati president Hotasi Nababan says the carrier owes vendors and creditors 1.5 trillion rupiah.

While Garuda and Merpati have been looking to the government for financial relief, the country’s minister for state-owned enterprise Sugiharto has told local reporters that the government may seek to merge the country’s three state-owned carriers – Garuda, Merpati and Pelita Air Service.

A decision on this issue may happen as early as February, says Sugiharto, who adds that Garuda and Merpati should focus on different market segments rather than try and compete against each other. Pelita is a much smaller state-owned carrier that has been scaling back its scheduled passenger operations to focus on charters.


Source: Flight International