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Wed 18 Apr 2012 09:53 AM

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Bahrain MPs say they will reject Gulf Air bailout

Parliament recommends against US$1.76bn for flagging national carrier

Bahrain MPs say they will reject Gulf Air bailout
Gulf Air

Bahrain’s parliament has recommended that MPs reject a proposed US$1.76bn bailout for national carrier Gulf Air, it was reported today.

According to TradeArabia News Service, the GCC state’s parliament’s financial and economic affairs committee made the recommendation based on the unclear status of Gulf Air’s board and management.

The committee also disagreed on a supposed four-point plan to revive the airline’s fortunes, which included proposals such as downsizing, selling off the carrier, or dissolving it altogether.

The possibility of paying BHD460m to launch a new airline for the Gulf island state was also mooted.

“Our recommendation is against sanctioning the financial aid to increase Gulf Air's capital in this year's budget because the government has failed to present us with a clear stance on the airline's current board and its executive management,"  Ali Al Durazi, committee chairman, was reported as saying.

The last 12 months have been particularly tough for Gulf Air, which has also been struggling to maintain profits since early 2011 when political unrest first broke out in Bahrain.

In February this year the carrier said it was cancelling flights on underperforming routes, citing commercial reasons.

It abandoned services to four destinations, Damascus, Athens, Milan and Kuala Lumpur, due to difficult economic circumstances and the ongoing unrest in the Arab world. It also alluded to the high price of fuel and low passenger numbers as grounds for cutting its services. 

The Gulf state’s second flag carrier Bahrain Air said in March it would be open to a merger with Gulf Air, should the government owned company also be interested.

Media reports say Gulf Air continues to struggle financially, despite securing an US$80m loan in February from a unit of Mashreq Bank in Dubai.

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