Garuda Indonesia (GA, Jakarta Soekarno-Hatta) has agreed to loan its Citilink (QG, Jakarta Soekarno-Hatta) subsidiary IDR845billion (USD65million) with funds to be disbursed over a four-year period an airline filing with the Bursa Efek Indonesia has revealed.
Garuda's Director of Finance and Risk Management, Ari Askhara, said the loan, which was signed by the two carriers on March 9, will help shore up Citilink's working capital reserves.
Ashkara explained that despite its transition from a Garuda strategic business unit to a subsidiary in mid-2012, Citilink has yet to establish a firm enough financial footing which would allow it to apply for traditional bank loans. As such, the carrier was forced to turn to its parent to help secure additional liquidity.
While it is in the process of returning to longterm profitability, Citilink has, until the second quarter of last year, been consistently in the red racking up accumulated losses of about USD100 million.
As part of its turnaround plan, Citilink’s new CEO Albert Burhan this year deferred the airline's planned development of scheduled international routes in favour of consolidating its position within the Indonesian domestic market.
