Plans to inject BD664.3 million ($1.76 billion) into Bahrain’s national carrier Gulf Air to help ensure the airline's survival were given initial approval by the Shura Council yesterday (March 28).

The financial and economic affairs committee welcomed the bailout plan, but requested more details be provided before it fully approves the deal.

Initial agreement was reached between the Cabinet and National Assembly last week to downsize Gulf Air to revive the airline and reduce its losses, including the cancellation of international agreements and redundancies.

But some MPs have been lobbying against giving the airline more money.

Parliament's financial and economic affairs committee chairman Ali Al Durazi yesterday said a final decision on the bailout would be taken on Monday.

'Gulf Air is not just an airline, it is the backbone of Bahrain's economy and we can't stop its financial backing,' said Shura Council financial and economic affairs committee chairman Khalid Al Maskati.

'Everyone has a role in backing the airline and it is not just the government pumping money, but an attitude that this is our franchise.

'For 60 years Gulf Air has been the strength of the country and leaving it now to fall will serve no one good.'

Al Maskati said Gulf Air had 1,800 employees, not including others it hires on sub-contracts.

'There are many airport services companies that depend on Gulf Air and dissolving the company will mean that they will also be gone and that will hugely affect the economy,' he said.

The downsizing 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 was not possible in the short-term.

'There have to be new long-term strategies to take the company from loss to profitability, but first politicians have to remove their hands from the company's affairs,' said Al Maskati.

'Politics has done nothing good for the company and it has taken it into further losses rather than helping it in any way.

'The airline has to look for ways to revitalise movement to and from Bahrain, increase the regional network and reduce costs besides properly competing and sharing with international airlines, but that doesn't happen under stress.

'We sanctioned BD400 million a few months ago for Gulf Air to repay its debts, but that wasn't enough for various and obvious reasons related to the unrest in the region and Bahrain, and it was time for more to be pumped in.'

Al Maskati said the committee believed only the size of the payout was up for debate.

'No one knows why such huge amounts are needed, yes we are aware that the company needs a lot, but this figure has to be looked at carefully,' he said.

'We have to first promote Gulf Air within Bahrain and that's through giving ministries and government organisations special competitive prices to have their employees travel on it rather than on other regional airlines,' he said.

'There are many ways to help Gulf Air, but the management has to shake things up in a way that revolutionises business and at the same time builds a new stronger foundation.' – TradeArabia News Service