Indonesia Plans to Merge Pelita Air with Garuda Indonesia to Strengthen Aviation Industry

Indonesia's sovereign wealth management agency, Danantara, in collaboration with the State-Owned Enterprises Agency (BP BUMN), is spearheading a significant consolidation of the nation's airline sector. The initiative involves merging Pelita Air with the flag carrier, Garuda Indonesia, with the stated goal of bolstering the country's aviation industry.

This strategic move comes at a time when Garuda Indonesia has reported a net loss attributable to owners of the parent entity amounting to US$76.48 million (approximately Rp1.26 trillion) for the first quarter of 2025. The proposed merger is part of a broader plan to establish a state-owned airline holding company, which was previously targeted for completion by mid-2026. This holding is expected to encompass Garuda Indonesia, its subsidiary Citilink, and Pelita Air.

Danantara has indicated that the financial pressures reflected in Garuda's 2025 report represent a pre-intervention phase. The agency is actively working on consolidating Garuda and Pelita through an acquisition scheme, with an anticipated completion date as early as 2026. This consolidation is seen as a crucial step towards revitalizing and strengthening Indonesia's aviation capabilities.