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Wed 13 Feb 2013 09:13 AM

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End of the runway for Bahrain Air

Gulf state’s second carrier closes down, blames unrest and transport minister

End of the runway for Bahrain Air
Bahrain Air CEO Richard Nuttall.

Bahrain Air, the country’s second airline, has abruptly shut down, claiming it cannot pay back financial losses accrued in relation to “the unstable political and security situation in Bahrain”.

The airline entered voluntary liquidation on Tuesday, forcing its immediate closure and potentially leaving hundreds of passengers stranded, with tickets dated after February 12 unable to be used or transferred to another airline.

“If you have not completed your journey, you will regrettably have to make your own arrangements and purchase new tickets if necessary,” a statement from the airline says.

The carrier claims that while it had received no compensation from a government decision to limit its activities, it was at the same time being chased to make immediate payment on past government debts.

“This effectively strangles the airline by simultaneously requesting payments and reducing its ability to generate the necessary revenues both to make these payments and to sustain long term profitability,” the airline said, in a statement.

Bahrain Air also blamed the country’s minister of transportation, Kamal Ahmed – also a board member of local competitor Gulf Air – for failing to help find a solution to the crisis.

“He [Ahmed] has shown no inclination to provide a meaningful solution. His decisions to restrict route approvals have cost the airline BHD4.5m [US$12m] in lost revenues over the last three months,” the statement continued.

“The position of the Minister was made clear when, during a time of negotiation, he only extended the company’s [license to fly], after operational audits had been passed, for two months instead of one year.

“After meetings, the latest company proposal was forwarded last Thursday 7th February. During the EGM, a very negative response was received providing only minor route concessions in return for payments of over BHD4m.”

The airline has four leased aircraft and around 300 staff, who will now be laid off.

Passengers with tickets will be able to apply to the company’s liquidators for a refund.

Local unrest in Bahrain and elsewhere in the Arab world, plus stiff competition from other airlines in the Gulf, have left both of the country’s carriers posting losses.

Gulf Air, which is owned by Mumtalakat, Bahrain’s sovereign wealth fund, has cut routes and plane orders as it bids to get back in the black. Last year, Bahrain Air signalled that it would be open to a merger with its larger competitor.

The last Gulf-based airline to shut down was Saudi domestic operator SAMA, which closed down in 2010 after failing to make a profit.

* Additional reporting by Courtney Trenwith

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Expat08 6 years ago

why does this small country need 2 airlines?

gir 6 years ago

Who is gonna pay the fraud...taking money and not returning back..such coward ...I hate bahrain...

RPN 6 years ago

The report says the last gulf based airline to shut down was SAMA airlines in Saudia. However, there was also Wataniya Airways based in Kuwait which ceased its operations in the year 2011.

Sam 6 years ago

If u hate Bahrain, what were u (presumably) doing in Bahrain/trying to fly Bahrain Air. Also, to say u hate a country because of an Airline is daft, and makes no sense. Also, this has nothing to do with being a fraud or a coward. U need to pick your adjectives accurately - or maybe just be less confused than u seem to be.

Airlines close all the time - look at the number that have shut down in Europe in the last few years - so when u try to save money and buy budget in advance, the risk is always there that when its time to fly, the Airline may not be around. Remember that next time u r looking around for a "bargain"...

john Smith 6 years ago

We are now starting to see the adjustment in the regions airline capacity. Weaker airlines have and will fail while we will no doubt see mergers or transformations amongst some of the larger ones.
I am sorry for the people who have lost jobs and money with the failure of Bahrain air, but as a business it never made sense. Lets hope a sense of realism returns for everyone involved in the aviation sector.

ahmed 6 years ago

because of high demand

ahmed 6 years ago

this is normal for a business to fail

tarek 6 years ago

@ Ahmed, I am afraid it is not high demand, but rather jealousy from the UAE and trying to imitate Dubai in everything instead of coming up with new and creative ideas!

Kuttan 6 years ago

Last 1 month Bahrain Air Played a cheap Game. They Advertise so many promotions through advertising media and through email and SMS. Many of the people reserved Bahrain Air Tickets on last 1 month and all they are cheated. I don't think they can get refund.

Sam 6 years ago

This is a day light robbery, robbing innocent passengers by alluring them with tempting offers in past one month. Government should investigate this.