A Merpati Airlines ticket counter at the Soekarno-Hatta International Airport in 2014. (Antara Photo/Lucky R.)

Garuda Joins SOEs to Help Ailing Merpati


OCTOBER 16, 2019

Jakarta. Flag-carrier Garuda Indonesia has joined a group state-controlled companies to sign an agreement on Wednesday to try to keep afloat the ailing Merpati Airlines. 

Under the agreement, Garuda will periodically hire Merpati Airlines as the marketing agent for its cargo, ground handling and maintenance and repair services. Garuda will also help run Merpati Airlines' training centers.  

Cement maker Semen Indonesia, state energy company Pertamina, state trading house Perusahaan Perdagangan Indonesia and state utility firm Perusahaan Listrik Negara have also agreed to use Merpati's services to send goods to Papua, Indonesia's easternmost region. 

"We hope Garuda's support would help Merpati improve its performance and at the same time help build the national aviation industry," Ari Askhara, the president director of Garuda Indonesia, said on Wednesday. 

For more than 52 years, state-owned Merpati had been a mainstay for air travelers in the country's remote areas, before it succumbed to fierce competition from budget airlines such as Lion Air and AirAsia.

When it ceased operation in 2014, Merpati had accumulated Rp 7.9 trillion ($561 million) in debt, some of which to state lenders Bank Tabungan Negara, Bank Mandiri, Bank Negara Indonesia dan Bank Rakyat Indonesia. The lenders also signed Wednesday's agreement. 

Merpati has embarked on a restructuring effort and looked for new investors to allow it to fly again. 

Asep Ekanugraha, Merpati's president director, said the airline is buoyed by the support and is gearing up to return to business. "We are continuing to strengthen our operational foundation," he said.