November 14, 2018 / 10:51 AM / a month ago

UPDATE 1-Garuda Indonesia to take over operations of rival Sriwijaya Group

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JAKARTA, Nov 14 (Reuters) - National airline Garuda Indonesia said on Wednesday it would take over operational control of rival Sriwijaya Group, giving them a majority share of the fast-growing domestic aviation market.

Under the agreement, Garuda, via its unit Citilink, aims to improve the operational and financial performance of Sriwijaya Air Group, including in meeting its financial commitments to Garuda Group, it said in a statement.

Garuda has been battling for market share against the country’s No. 1 player, Lion Air, which last month suffered a crash of a Boeing Co 737 MAX jet, killing all 189 people on board.

The take over will involve change in Sriwijaya’s management, said Garuda spokesman Ikhsan Rosan.

“With this operational cooperation, we hope Sriwijaya will get healthier ... With healthier operation, they will earn profit and fulfil their obligations,” Rosan said, but declined to disclose Sriwijaya’s financial obligations to Garuda.

The partnership could also be escalated to share ownership in Sriwijaya Group, Garuda’s statement said.

Sriwijaya, which operates 54 aircraft, had intended to launch an initial public offering in 2017, but put that plan on hold.

Domestic air traffic more than tripled in Indonesia over the past decade as rising prosperity and lower fares made flying affordable for more people.

With 129 million passengers in 2017, the Southeast Asian country is the world’s 10th-largest aviation market and is projected to continue growing. (Reporting by Bernadette Christina; Writing by Fergus Jensen and Fransiska Nangoy; Editing by Subhranshu Sahu and Mark Potter)

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