Garuda Decides to Spin Off Citilink

Wandrik Panca Adiguna | 09 Desember 2010 04:56 WIB

JAKARTA: Flag-carrier Garuda Indonesia decides to spin off its strategic business unit Citilink after the largest airline in Indonesia conducts its IPO.

Strategic and IT Director of Garuda Elisa Lumbantoruan revealed the no frill flight segment ahead would increase significantly, making it important for Citilink to stand alone as a company. However, she informed, the spin-off had to be delayed until Garuda conducted its IPO by early February 2011. "We will continue our process of requesting aviation business permit for Citilink from the Ministry of Transportation as part of our spin off plan. However, we will delay it until Garuda is able to conduct IPO," she said yesterday. She exposed the airline had filled in IPO-related documents to be submitted to Indonesia Stock Exchange (BEI) and the Capital Market Supervisory Agency (Bapepam), making it impossible right now to continue with the process of requesting SIUP for Citilink. "The documents contain prospectus. If Citilink is able to get SIUP in, say,. January, there will be questions. So, it will be better for us to delay the plan." Previously, Elisa disclosed Garuda and Citilink might remain under one company (using Garuda-owned SIUP), but with two AOCs (air operator certificates), similar to the scheme adopted by Australia's Qantas and Jet Star. Citilink, which plays in the no frill segment, currently operates five classical Boeing 737 airplanes (series 300 and 400) granted from Garuda In terms of armada, other airlines in the same class have operated younger airplanes. For example, Mandala and Indonesia AirAsia operate Airbus 320 airplanes and Lion Air Boeing 737-900 Extended Range (ER) airplanes. Elisa exposed the airline also had a plan to procure at least 25 younger airplanes until 2015. Separately, President Director of Garuda Emirsyah Satar said the state airline was still reviewing whether it would use Boeing, Airbus, Embraer, or Bombardier for Citilink. "What is certain, Citilink will only operate one airplane since it will make the maintenance and operation more effective and efficient." He explained the existence of Citilink was important to boost the penetration of Garuda in the low-cost carrier market. "So, we will have two airlines in two flight segments, namely Garuda in the full service segment and Citilink in the LCC [low cost carrier] or no frills segment." Emirsyah, who is also the Chairperson of the Indonesia National Air Carriers Association (INACA), once said the low-cost carrier market this year was projected at 36 million passengers or 60% of the total aviation market of 60 million passengers. (wiw)

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