Gulf Air overhaul plans sought
Manama, May 31, 2012
Proposals to restructure Gulf Air are being sought from the government as part of a bailout deal for Bahrain's national carrier, which could involve bringing in partners from the private sector.
The airline was seeking a government rescue package of BD664.3 million ($1.76 billion), but MPs vetoed the move earlier this month.
A proposal to slash the size of the bailout by two-thirds has since been put forward by members of the Shura Council, who claim it has the support of MPs and government officials.
However, the Shura Council committee reviewing the bailout is demanding a detailed plan outlining how the new amount would be spent and a blueprint for a newly-restructured Gulf Air.
"The Shura Council is backing that Gulf Air gets something and we have managed to reach an agreement between my committee members, MPs and a number of government officials that the amount has to be reduced by two-thirds if it is to be approved in October," the chamber's financial and economic affairs committee chairman Khalid Al Aaskati told a Press conference in the National Assembly complex yesterday (May 30).
"It is vital that Gulf Air, through the government, gives a good presentation on how it will spend the money we are planning to sanction - besides submitting a blueprint on how the airline will look in future."
The Shura Council was due to vote on the bailout last week before its summer recess, but the vote was postponed until October to study the options.
Al Maskati urged the airline to use the time before them to seek out investors or a strategic partner to help it meet future costs and stand alone as an independent business.
"Gulf Air needs a management that can run the airline properly and compete with other regional carriers, besides an immediate revision of its revenues, spending and a reassessment of its aircraft and destinations," he said.
He said the carrier's overheads were disproportionate to its income, which was not helped by the indefinite suspension of lucrative routes to Iran and Iraq since last year's unrest.
"Politics intertwining with business has affected Gulf Air and the closure of two profitable destinations, Iran and Iraq, has led to 35 per cent losses," said Al Maskati.
"That's not all, as other regional competitors have capitalised on that and took over those routes. Besides that, air fuel prices are very high here in Bahrain compared to other GCC countries and for this Gulf Air's tickets cost more than its competitors."
While Al Maskati stressed that his committee did not want Bahrainis to be sacked as part of any restructuring, he added a proper employment structure was needed to bring it in line with other airlines.
"There are 1,800 Bahrainis in Gulf Air and we assert that they are not subject to lay offs, but again we need to stress that the right person has to be appointed in the right place," he said.
He also stressed the importance of Gulf Air's survival.
"Whether it is our financial or insurance institutions, tourism or retail, everyone needs Gulf Air to stay operative in the best way possible," said Al Maskati. "Gulf Air is a strong pillar of the economy and without it many sectors would collapse." – TradeArabia News Service