Bahrain-based Gulf Air's board has set up a new committee to oversee the airline's restructuring plan.
In a statement, the struggling national carrier said the committee would have to make "some tough decisions and choices" in the short term to ensure its long term sustainability.
The board, led by chairman Sheikh Khaled bin Abdulla Al Khalifa, also deputy prime minister, has passed a resolution to form an executive restructuring committee which will also monitor the spending of the funding recently granted by King Hamad bin Isa Al Khalifa.
Last month, Bahrain's king issued a royal decree authorising the government to extend BD185m ($491m) to the carrier.
The board also established plans for an audit committee and governance committee.
The statement said the moves were part of an "accelerated strategy designed to put the airline on a path towards long-term sustainability".
The board stressed the "importance of Gulf Air as key national infrastructure asset helping to maintain an independent destination status for Bahrain".
Sheikh Khalid said: "The formation of these committees demonstrates our commitment to support Gulf Air and transform it into an airline that serves the people and economy of Bahrain, contributing to its growth and diversity.”
Earlier this month, Gulf Air said that it has won approval from Airbus and Boeing to amend plane orders in a bid to save more than $2.5bn.
The national carrier said in a statement that it has signed amendment agreements with both aircraft manufacturers to "realign its original orders to meet its long-term strategic needs".
Gulf Air has been in extensive discussions to renegotiate its order book since 2011, it said.
It added that the move had become necessary "in light of the tough economic conditions faced by the global aviation industry over the last 15 months".
The revised Boeing agreement allows the airline to reduce its wide-body 787s Dreamliner requirement from 24 to 12–16 aircraft depending on Gulf Air’s strategic requirements.
These aircraft are scheduled for delivery towards the end of the decade and will replace Gulf Air’s current wide-body fleet.
In addition, Gulf Air has also concluded a deal with Airbus to cancel the 20 A330-300 aircraft it has on order, replacing them with eight A320neo jets, all of which will be delivered by the end of the year. Another 16 A320neo aircraft will join the carrier’s fleet to replace Gulf Air’s single-aisle fleet in “the latter part of the decade”.
Although state-owned Gulf Air suffered losses in the wake of political unrest in the kingdom, passenger numbers increased 13 percent in the first half of the year, while seat load factors reached 77 percent, up five percent from the same period a year earlier.
The carrier’s revenues for the first half of the year have increased six percent compared to the same period last year.