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Garuda & Merpati to Merge?

Re-merging Garuda Indonesia and Merpati Nusantara Airlines Under Consideration by Government.

(11/19/2001) The State Minister for State-Owned Enterprises, Mr. Laksamana Sukardi, has recently endorsed the idea of merging Garuda Indonesia and Merpati Nusantara Airlines.

Underlining that such a move would first have to be subject to careful scrutiny, the Minister said both companies now have their own respective corporate cultures and any potential synergy resulting from such an amalgamation would have to reduce costs and add to the overall efficiencies of both carriers.

Minister Sukardi was speaking at a thanksgiving ceremony held in connection with the recently approved restructuring of US$1.8 billion in Garuda's debt that successfully extended the repayment period from 12 to 16 years. Escaping the threat of imminent liquidation, Garuda Indonesia received final permission to restructure its debt last week from the High Courts of London and Singapore. Mr. Abdulgani, the President Director of Garuda, recently told the press that permission to restructure their corporate debt was based on his airline's dramatic turn around achieved over the past 3 years that managed to reduce costs, obtain Federal Aviation Administration (FAA) certification, be named the best on time airline at Amsterdam Schiphol airport, and win a "crisis busting" award from Travel Weekly East magazine.

Garuda's boss has publicly expressed his scepticism regarding the merging of the two airlines in light of the unfavorable results of recent financial and management audits of Merpati.

The next step in Garuda's financial salvation include plans for the privatization of airline 2003, providing the necessary capital to repay its debt and finance expansion plan for the national carrier.