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Thu 14 Jan 2010 08:54 AM

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Gulf Air's finances called into question by MPs

Ministers accuse the airline of 'weak action' and delays costing it millions of dinars.

Gulf Air's finances called into question by MPs
FLAG CARRIER: Gulf Air is restructuring in bid to save $3bn over five years.

Bahraini MPs demanded answers to the state of the national carrier Gulf Air’s finances on Wednesday, accusing it of delays costing millions of dinars.

Ministers accused the airline of “weak action” to collect hundreds of thousands of dinars owed to it by travel agents in Morocco, Saudi Arabia and Lebanon.

The carrier’s financial position has also been made significantly worse by its failure to sell two Boeing 767s at the right time, costing it BD23.5m, MPs told Gulf Daily News.

"The action Gulf Air has taken to collect its money and ensure that it doesn't get lost or squandered is weak," chairman of the financial and economic affairs committee Abduljalil Khalil, told the paper.

"We spoke in the meeting about six million Moroccan dirhams (BD299,000) owed by 30 Moroccan travel agents; 800,000 Saudi riyals (BD84,640) owed by Saudi travel agents; and $1.5m (BD567,000) owed by Lebanese travel agents that were not collected.”

Khalil also told the paper MPs want answers as to why the airline dropped a bribery case against a former employee, despite “clear evidence” against them, and an explanation as to why staff, in some instances, were given 220 percent pay rises.

"A pay differential (promotion-related pay rise) has been given to 370 employees, sometimes reaching 220 percent – something that has led to BD1.64m in losses.

“Gulf Air owes the Pension Fund Commission BD449,000 for unpaid contributions over the years. The company has cancelled 661 flights on 48,627 passengers and delayed 11,050 flights for 1.3m others," he said.

A spokesman for the airline told the paper: "Gulf Air's priority is to deliver a commercially sustainable and dynamic airline that effectively serves the people and the economy of Bahrain and represents the kingdom on the world stage.

"As part of the new strategy, Gulf Air is working hard to align its cost base, maximising investment into areas of the business that will offer the best returns whilst reducing cost in those that don't. Less than eight weeks since announcing our plans, our efforts are already starting to pay off as we strive to reach profitability by 2012."

Gulf Air is hoping to save $3bn over five years through the restructuring process.

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