Gulf Air buys its way out of financial trouble

Gulf Air is preparing to announce a $3 billion complete ‘re-fleeting' of the airline in the next few weeks with the purchase of 35 new aircraft despite writing off approximately $230 million of losses in a traumatic eight months for the troubled Bahraini carrier, a spokesman has exclusively revealed to Arabian Business.

On April 17 the airline officially announced it was financially "bleeding", losing up to $2 million a day between April and June and $600,000 a day between July and November, according to a spokesman speaking from the Dubai Airshow this afternoon.

It also sacked its CEO Andre Dose with Bjorn Naf stepping in as acting president and chief executive officer. This amounts to a $230 million loss in eight months according to Arabian Business's calculations.

Naf is expected to be unveiled as the carrier's official CEO in Bahrain in the coming weeks due to his "good work" during the company's ‘Get well' restructuring programme which began in July earlier this year.

"We are in intense dialogue with Airbus and Boeing and will announce the successful contract in the coming weeks," the spokesman said.

"The funding will either be done through private investment and with the full support and financial backing of the government and it's investment arm, Muntalakat."

Gulf Air chairman A.L Kooheji told reporters that the airline was also considering an Initial Public Offering (IPO) at the end of 2008 or the beginning of 2009 when he predicted the carrier would once again be profitable.

"First we have to stabilise the airline," said the spokesman. "Then we have to make it profitable and that will happen sometime at the end of next year or at the start of 2009," he added.

The Bahraini government officially took 100% control of the airline on November 6 this year with losses being reduced from just under $2 million a day to between $400,000 to $600,000 a day.

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