Bahrain's Mumtalakat says seeking aviation acquisitions

Bahrain's sovereign wealth fund to create dedicated aviation company, says CEO
Bahrain's Mumtalakat says seeking aviation acquisitions
(AFP/Getty Images)
By Sarah Townsend
Wed 29 Jul 2015 01:57 PM

Bahrain’s sovereign wealth fund plans to create a new subsidiary to invest in the aviation sector and hold assets such as beleaguered national airline Gulf Air.

The proposed company, Falcon Holding, would aim to consolidate key aviation assets and implement government plans to increase activity in what it views as a lucrative sector.

Mumtalakat will continue to be the 100 percent owner of existing aviation assets – Gulf Air, Bahrain Airport Company and Gulf Aviation Academy – and provide “strategic guidance and support”, its chief executive Mahmood Al Kooheji told Gulf Daily News.

“The plan is to help the aviation assets operate in an independent, commercial and efficient manner, and look for new opportunities in the aviation sector, which would add value in the business and ultimately reflect on Mumtalakat’s portfolio and the economy of Bahrain,” he said.

He added: “Post consolidation, the companies would continue to operate as independent entities with one board of directors which would guide the operations under one strategy.

“This will facilitate a unified vision for Bahrain’s aviation ecosystem and ensure more efficient and coordinated decision-making at various entities.”

It's understood that the proposals had been under discussion since 2013 and that the chairman of Mumtalakat, Sheikh Khalid bin Abdulla Al Khalifa, is expected to chair the new company.

It is thought that, eventually, the company could also hold Bahrain Airport Services (BAS), which manages ground handling, catering services, cargo and warehousing at Bahrain airport, and Bahrain Duty Free pending a possible acquisition of the two private companies by the Bahrain government.

A Mumtalakat spokesman declined to comment.

Abdullah Abokhamseen, CEO of BAS, said: "We confirm that there is no
plan by Bahrain government to take over Bahrain Airport Services nor there
is any intention of Bahrain Airport Services shareholders to sell the company
for the time being."

According to GDN, Mumtalakat will appoint the board and set a strategy for operations in the coming months – and substantial savings are expected to be made as a result.

Al Kooheji said: “The synergies include but are not limited to efficiency improvements across a plethora of shared services functions, strategic sourcing and strategic planning.”

He also emphasised the importance of air connectivity in driving Bahrain’s economic growth.

Bahrain Airport Company, one of the assets that would fall under the remit of the new subsidiary, is the manager of Bahrain International Airport, where a $1 billion expansion is ongoing.

There are plans for a new terminal to be completed by 2019, enabling the airport to accommodate a total of 14 million passengers a year. The airport saw 10pc growth in passenger traffic last year and is expecting about 8.7m passengers by the year-end, the newspaper said.

Meanwhile, the plans to establish Falcon Holding mark an important potential turning point in the fortunes of Gulf Air, which has struggled in recent years under the weight of hefty losses and falling demand.

Earlier this year it was reported to be facing BD50 million (US$132 million) of losses.

However, GDN reported that following a restructuring in 2013, the airline, which flies to 45 cities in 24 countries and accounts for more than 60 percent of Bahrain’s air traffic, is set to add more routes and increase frequencies.

In April, it was reported that MPs had submitted plans to float Gulf Air in an initial public offering (IPO), but the proposals are believed to have been shelved

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