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Fri 6 Apr 2012 11:29 AM

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Bahrain Gov't fully behind Gulf Air, says minister

Finance minister denies national carrier could close; says gov't keen to empower airline

Bahrain Gov't fully behind Gulf Air, says minister
Gulf Air

Bahrain's Gulf Air will not close down and the government is planning to empower it to overcome its financial challenges, a senior official has said.

In comments published by Bahrain daily Gulf Daily News on Friday, finance minister Sheikh Ahmed bin Mohammed Al Khalifa said: "The government's stance towards the future of the national carrier is crystal clear and does not support any room for interpretation."

He cited plans for a draft law seeking an additional credit line in the budget to pump BD664.3m to boost Gulf Air's capital as evidence of support from the government.

"The aim is to empower the national carrier to continue to exist and overcome the challenges it is now facing," he was quoted as saying.

He denied reports that the airline could close down, saying the government was fully behind plans to boost its capital after studying a report produced by consultants appointed by Mumtalakat, the Gulf kingdom's sovereign wealth fund.

The report gave options to either retain the company's structure and status, or to liquidate it, or to tentatively halt operations for a short while and then resume operations after restructuring its workforce.

Interaction continues between the executive and legislative authorities regarding the national carrier to reach the most perfect formula, Sheikh Ahmed added.

In February, Gulf Air, Bahrain’s flag carrier, said it was cancelling flights on underperforming routes, citing commercial reasons.

The state-backed airline said it was halting its services to four destinations, Damascus, Athens, Milan and Kuala Lumpur, in view of difficult economic circumstances and the ongoing regional unrest.

Gulf Air has been struggling to maintain profits since early last year, when passenger numbers dropped amid anti-government protests.

In May, the carrier said it had laid off some 200 members of staff, and that bookings down by a quarter as the country grappled with the Arab Spring.

The struggling airline announced in January this year it planned to shrink operations and seek cash from government funds, including Mumtalakat, which has a stake in the carrier.

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