A proposal to privatise Bahrain’s national carrier Gulf Air is now under review by the kingdom’s parliament.

Five MPs submitted a plan yesterday (April 22) to float Bahrain's national carrier on the stock exchange through an Initial Public Offering (IPO), said a report in the Gulf Daily News (GDN), our sister publication.

They argued the loss-making airline is draining funds from the coffers of the country's sovereign wealth fund, Bahrain Mumtalakat Holding Company.

Gulf Air is one of 36 companies that make up Mumtalakat's portfolio of non-oil related businesses, including Alba, Bahrain Airport Company, Batelco and the Arab Shipbuilding and Repair Yard Company.

MPs spearheading the proposal are parliament human rights committee chairman Khaled Al Shaer, public utilities and environment affairs committee vice-chairman Ghazy Al Rahma, Mohammed Al Ahmed, Abdulrahman Buali and Jalal Kadhem.

“Gulf Air has to be fully privatised and offered to the public because that's the best way to ensure it is run from a commercial direction and, at the same time, ensure the government doesn't shoulder losses or have mother company Mumtalakat direct its profits towards (supporting) it,” said Buali.

“The government could be a shareholder, but not with a majority of shares, because that will mean nothing.

“They (the government) can take 49pc (of shares), but should not be in charge of the company.

“When Seef Properties was under the government it was barely profitable, but when it was offered to the public it became hugely profitable.

“It means investors willing to buy Gulf Air will have to buy its losses, expected this year to be around BD50m, but an evaluation of its assets and liabilities would be needed first.”

Buali claimed Gulf Air had suffered from politically-motivated decisions that might not have been taken if the airline was a private enterprise.

“We can't question the government's decision to stop flights to Iraq, Iran and Lebanon during unrest (in 2011) because it owned 100 per cent of the airline and was the sole decision-maker,” he said.

“But it was wrong, as was proven when the company increased revenues after flights were resumed.

“Gulf Air has to be commercially run, not politically. The current board is mostly government ministers, who could close down London as a destination if there was a problem with the UK.”

Meanwhile, Kadhem argued that full privatisation of Gulf Air would benefit the airline.

“The company is in need of a financial injection and the private sector would be the best choice, since it is more concerned about how cash is deployed,” he said.

“Airlines today are run independently from governments and it is time that Gulf Air followed suit.”

The proposal to privatise Gulf Air has been submitted despite Transportation and Telecommunications Minister Kamal Ahmed telling MPs on April 7 that the airline had reduced losses by more than three quarters in the space of three years.

He said losses of between BD40 million ($105.4 million) and BD50 million were forecast for 2015, compared with BD200 million in 2012, thanks to cost-cutting measures that included streamlining the airline's fleet, cancelling some destinations and voluntary redundancy schemes.

MPs on Tuesday launched a separate investigation into the financial affairs of Mumtalakat.

Ahmed earlier this month described the probe as unnecessary, saying many of the companies within its portfolio were profitable.

However, MPs are going ahead with the probe due to concerns about violations documented in the Financial and Administrative Audit Bureau report for 2013. - TradeArabia News Service