Indonesia Reviews Plan to Merge Two State Airlines - Executive

MERGER - JAKARTA. The Indonesian government is reviewing a plan to merge state-owned airlines Garuda Indonesia and Pelita Air, a unit of energy firm Pertamina , to ensure affordable airfares, an executive said on Tuesday.

The plan came a year after Garuda reached an agreement with its creditors to restructure its $9 billion debt.

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Pelita Air president director Dendy Kurniawan told Reuters that it welcomed the plan, which he said was under the review of Indonesia's state-owned enterprises (SOE) ministry, adding the possible merger would "strengthen the aviation industry" and ensure affordable ticket prices.

His statement came after local media cited SOE minister Erick Thohir as saying on Tuesday that he planned to merge Pelita Air with Garuda group, which includes its low cost airline unit Citilink.

Erick said the merger will help reduce the country's logistic costs and increase the its fleet size, which he said needed 179 new planes.

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Garuda was operating 101 planes in June, according to its website. Pelita Air operates 7 planes, its CEO said.

Garuda CEO Irfan Setiaputra said in a statement on Tuesday the airline was still discussing the merger.