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Sriwijaya Air ends Citilink management deal

Sriwijaya Air has ended a management deal with Garuda Indonesia's low-cost arm Citilink, leaving the carrier to chart its own independent path.

A letter from Garuda's director of maintenance and services Iwan Joeniarto dated 7 November and seen by Cirium indicates that Sriwijaya is no longer affiliated with the Garuda Indonesia Group.

"We refer to the current status of management cooperation between Sriwijaya Air and Citilink Indonesia, a member of Garuda Indonesia Group. Due to the circumstances and some matter which both parties have not yet settled, we regret to inform you that Sriwijaya is resuming business on their own," Joeniarto says.

"As such, Sriwijaya will no longer be a member of Garuda Indonesia Group. The relationship between Garuda Indonesia Group and Sriwijaya Air Group will resume on a business-to-business basis."

Yusril Ihza Mahendra, who is both an attorney for Sriwijaya and one of its shareholders, told reporters on 8 November that preparations to end the management deal began after there was a "sudden instruction" by Garuda to its subsidiaries to service Sriwijaya only after receiving an upfront cash payment.

This was despite a 7 November meeting between the both carriers, organised by Coordinating Minister for Maritime and Investment Affairs, Luhut Pandjaitan. In that meeting, the management pact was supposed to be extended for an additional three months from 31 October, the expiry date of the original agreement which began in November 2018.

Mahendra adds that both sides were also unable to overcome a deadlock to appoint a new management team, leading to a decision by Sriwijaya's shareholders to end the management deal and appoint its own leadership team instead.

Local media reports indicate that Jefferson Jauwena is now the president director at Sriwijaya, with Didi Iswandy as operations director, and Cecep Cahyana the director for quality, safety and security. Officials seconded from Garuda to Sriwijaya were also removed.

Earlier in September, Sriwijaya's board of commissioners sacked three senior executives seconded from Citilink without providing an explanation. Both sides then agreed to resume the management agreement in October, with Citilink saying that it decided to resume the deal in order to boost the latter's weak operating performance, and to support the development of a healthy Indonesian airline ecosystem.

Citilink has been managing the operations and finances of Sriwijaya Air and its sister carrier Nam Air since November 2018 under a deal with Sriwijaya Air Group aimed at averting a potential collapse of the airline following a deep loss in 2017.

Citilink declined to comment on the split when contacted by Cirium, while Sriwijaya officials could not be reached.

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