$1.6bn plan to revive Gulf Air; downsize likely
Manama, March 20, 2012
Gulf Air, the national carrier of Bahrain, is set to be downsized as part of a radical BD600 million ($1.59 billion) plan to revive the airline and reduce its losses.
An initial agreement was yesterday (March 19) reached between the Cabinet and National Assembly about the best approach for the airline.
It will include the cancellation of international agreements and redundancies.
Deputy Premier Shaikh Khalid bin Abdulla Al Khalifa, Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa and Transportation Minister Kamal Ahmed helped draw up the plan during a meeting at the National Assembly Complex.
Shura Council chairman Ali Saleh Al Saleh, parliament chairman Khalifa Al Dhahrani and members of both chambers also attended.
The plan envisions reducing annual losses from the present BD200 million to between BD80 million and BD100 million as studies have indicated that turning the airline around is not possible in the short term, it was pointed out at the meeting.
Speaking after the meeting, Shura financial and economic affairs committee chairman Khalid Al Maskati told the Gulf Daily News airlines across the globe were losing money.
'We can't say that Gulf Air will be a loss-free airline in future because that's impossible, but Bahrain is in need of the airline as a (positive) image for the country and in support of its status as a financial hub besides hosting international and regional events,' he said.
'To make things clear, downsizing doesn't mean that destinations get cancelled or sacking hundreds of staff, it means that operations get studied strategically with those profitable and of importance continuing.'
Al Maskati said the downsizing plan would mean a huge revision of the company's operations. 'The airline's board, whatever it is in future, will be responsible to look at the whole structure and make changes to meet the future and to achieve that a strong foundation had to be laid,' he said.
Al Maskati said the government's political interference in the company's decisions must end for it to run as a commercial entity.
'Political decisions have affected the airline and we have seen their effect over the past months and it is time that the company is left to run properly as a commercial entity without interference,' he said.
'We can't blame the current management for losses, the whole situation in Bahrain, the region and the world is changing and its effects have been felt by Gulf Air as have many businesses in other sectors.
'It is time for a change and I mean a positive change that takes into consideration that Gulf Air is not just an airline, but an important pillar of the economy.'
The Nati-onal Assembly, which is made up of parliament and Shura Council, was urged to sanction a BD664.3 million payment to help ensure the survival of the airline last Thursday.
Parliament financial and economic affairs committee chairman Ali Al Durazi said the money would be made available once Gulf Air presented detailed spending plans to the assembly.
'We know it needs money to increase its capital, but unless we have a detailed plan, we can't give such huge amounts while other sectors are also in need,' he said.
'We want Gulf Air to continue because without it several Bahraini companies that depend on the airline for business would be affected and we have to always consider the domino effect.'
Al Durazi added parliament's temporary Gulf Air committee, which has been tasked to conduct studies on its future, would this week meet to discuss the BD600 million payout. – TradeArabia News Service