Maintenance Sparks Break-Up In Indonesia

Garuda and Sriwijaya Air are engaged in a dispute which has led to a cutting of ties between the two parties.

A dispute over maintenance has contributed to a messy divorce in Indonesia between flag carrier Garuda and Sriwijaya Air.

Confirming the end of the two airline’s tie-up, Garuda was diplomatic, saying that “with a heavy heart we inform that Sriwijaya will continue its businesses without us”.

Not so Sriwijaya, whose lawyer, Yusil Mahendra, said that “Garuda’s domination had gone too far”.

Chief among his complaints was a stipulation in the two airlines’ memorandum of understanding that required Sriwijaya to conduct maintenance at Garuda, despite the smaller carrier having its own in-house capabilities.

“So Sriwijaya observed that instead of trimming the debt, the deficit was arising under the management of Garuda,” Mahendra said.

In October both airlines had to ground Boeing 737NG aircraft due to the ‘pickle fork’ cracks that have affected a number of 737 aircraft around the world.

Yet trouble was brewing even earlier, in September, when Sriwijaya fired three executives appointed to manage its operations by Citilink, Garuda’s low-cost arm.

In a bid to restore Sriwijaya to profitability and enable it pay its debts to Garuda, the flag carrier – via its Ctitlink – subsidiary took over operational control of the carrier in late 2018.

At the start of this year Gardua was mulling a debt-for-equity swap that would have given in majority control of Sriwijaya Air Group, which also includes Nam Air.

That is no longer on the cards, and Garuda’s technical arm, GMF Aeroasia, will hope its partnerships proceed rather more smoothly.

This includes a deal with AFI KLM E&M for A330 component support, a cooperation deal with Lithuanian MRO provider FL Technics and a joint venture with Lion Air maintenance arm Batam Aero Technik.

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