Citilink managing director Juliandra Tjahjanto, center, Garuda Maintenance Facility Aero Asia managing director Tazar Marta Kurniawan, left, and Sriwijaya Air commissioner Jefferson Jauwena pose for a photo at Soekarno-Hatta International Airport in Tangerang, Banten, on Tuesday. (Antara Photo/Muhammad Iqbal)

Garuda and Sriwijaya Resume Cooperation After Resolving Dispute

BY :THRESA SANDRA DESFIKA & NUR YASMIN

OCTOBER 01, 2019

Jakarta. National flag carrier Garuda Indonesia and Sriwijaya Air, the country's third-largest airline, have reconciled after a conflict over a management agreement saw them severing their ties last week.

Juliandra Nurtjahjo, a director at Garuda subsidiary Citilink, said they decided to continue the cooperation after considering passenger safety, the interests of customers and the protection of state assets.

"This cooperation is in line with a meeting between Garuda Indonesia Group and Sriwijaya Air stakeholders, facilitated by the Ministry of State-Owned Enterprises," Juliandra said on Tuesday. "This agreement and commitment are a turning point to create a healthier aviation ecosystem in Indonesia."

Jefferson Jauwena, acting director of Sriwijaya, welcomed the agreement, saying it would improve the airline's services and continue both companies' good relationship with GMF Aero Asia on aircraft maintenance.

"We are restarting our services with achievable flight safety," he said.

The management cooperation agreement between Citilink and Sriwijaya Air came under threat after the latter was accused of breaching it by unilaterally reshuffling its board of directors.

The agreement is meant to resolve financial and operational problems at Sriwijaya, and it helped the airline stave off bankruptcy last year.

The owners and board of directors of Sriwijaya Air approached State-Owned Enterprises Minister Rini Soemarno in October 2018 to request state assistance after the airline became mired in crippling debt. It owed Rp 942 billion ($67 million) to state energy company Pertamina, Rp 810 billion to Garuda Maintenance Facility, Rp 585 billion to Bank Negara Indonesia and Rp 130 billion to airport operators Angkasa Pura I and Angkasa Pura II. It also owed $15 million to spares and equipment suppliers.

Following the signing of a five-year management cooperation agreement, Sriwijaya Air and its subsidiary NAM Air handed management of all their operations to Citilink in November 2018. The agreement requires the appointment of all commissioners and directors to be done in coordination with Garuda Indonesia and Citilink.

Garuda Indonesia also deployed some of its staff to Sriwijaya Air to help the struggling airline overcome its financial woes. Sriwijaya did see its financial situation improve and it even reported a modest profit after an earlier Rp 1.2 trillion deficit.

However, Sriwijaya broke the agreement on Sept. 9 by firing three ex-Garuda directors without the Garuda Group's approval. The directors are Joseph Andriaan Saul, who served as president director; Harkandri M. Dahler, who was director of human capital; and Joseph Dajoe K.Tendean, the commercial director.

This prompted Citilink to file a lawsuit against Sriwijaya Air and NAM Air in the Central Jakarta District Court on Sept. 25, on behalf of the Garuda Group.

Sriwijaya's operational director, Capt. Fadjar Semiarto, and technical director, Romdani Ardali Adang, resigned on Monday over the conflict.

Fadjar said they decided to quit after Sriwijaya shareholders refused to heed their recommendations on solving a critical problem in the airline's hazard identification and risk assessment system.

Following Tuesday's reconciliation, the agreement will continue and Sriwijaya Air will now operate under the auspices of the Ministry of Transportation.

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