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Citilink to resume management agreement with Sriwijaya Air

Indonesia's Citilink is set to resume a management agreement it has with Sriwijaya Air Group, after both parties clashed over the unsanctioned removal of three senior executives seconded from Citilink by Sriwijaya's board of commissioners last month.

Citilink says it decided to resume managing Sriwijaya in order to boost the latter's weak operating performance, and also to support the development of a healthy Indonesian airline ecosystem.

Both parties came to the agreement, following meetings that were facilitated by the country's minister for state-owned enterprises Rini Soemarno, adds the low-cost arm of Garuda Indonesia.

Speaking at a 1 October press conference, Citilink's chief executive Juliandra Nurtjahjo listed three other factors that led to the resolution.

He says there is a need to prioritise safety and the airworthiness of aircraft operated by Sriwijaya Air and Nam Air, to protect the interest of customers who have booked tickets with both carriers, and to turn around the loss-making Sriwijaya, following steep losses incurred in 2017.

Neither Nurtjahjo nor a representative of Sriwijaya Air Group's shareholders explained what led to the sacking of the seconded officials in September, or what was eventually agreed upon during the meetings.

Last month, Sriwijaya's board of commissioners removed president director Joseph Saul, human capital and service director Harkandri Dahler, as well as commercial director Joseph Tendean from their positions. This was done without consulting Citilink beforehand, as stipulated in the management agreement.

A Citilink official tells Cirium that an initial meeting held on 11 September between both carriers, and attended by representatives from Sriwijaya's major creditors Bank Negara Indonesia, state-owned oil company Pertamina and GMF AeroAsia, yielded no result.

Two weeks later, Citilink filed a lawsuit against Sriwijaya at the Central Jakarta District Court for not complying with the management agreement, with the first hearing scheduled for 17 October. Despite the latest developments, the official says the company has yet to decide on its next move.

Citilink will also hold further discussions on the status of the sacked senior executives.

"The only thing that we can highlight today is the goodwill from both Garuda Indonesia Group and Sriwijaya Air Group to re-negotiate. Yes, there will be further discussions about that," adds the official.

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