Bahrain's Gulf Air secures $80m bank loan

National carrier inks agreement with unit of Dubai's Mashreq to meet capital requirements
Bahrain's Gulf Air secures $80m bank loan
Samer Majali, Gulf Air’s chief executive officer
By Reuters
Sun 12 Feb 2012 06:19 PM

Bahrain's national carrier Gulf Air has secured a $80m loan from a unit of Dubai's Mashreq Bank to help the ailing airline meet its working capital requirements.

The financing facility will be provided by the Mashreq Bahrain, a unit of the UAE-based lender, the companies said in a joint statement on Sunday. No further details on the nature of the financing or pricing for the loan was provided.

The loan deal comes just weeks after the struggling carrier said it would downsize operations and seek cash from government funds to sustain operations.

The airline said it could also tap Bahrain's sovereign wealth fund Mumtalakat, which has a stake in the carrier.

"The facility is set to assist Gulf Air to meet its medium-term working capital requirements," the statement said.

In January, a government delegation briefed parliament and called for a restructuring of the company for "effective operational requirements", the state news agency reported.

Reports said the government was considering options including dissolving or shrinking the loss-making airline, or selling it and creating a new carrier at a cost of BD460m ($1.22bn).

Bahrain has been in turmoil since the democracy movement erupted last year, followed by months of violence between riot police and teenagers that has worsened in the past two months.

Gulf Air said last May that it had laid off 200 employees and bookings were down by a quarter following the Arab Spring uprisings in the region.

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