Gulf Air wins $483 million govt lifeline
Manama, October 14, 2012
Gulf Air, Bahrain’s national carrier, today said His Majesty King Hamad bin Isa Al Khalifa, through a Royal Decree, has allocated BD185 million ($483.42 million) to recapitalise the airline.
The allocation is in order to actively address the national carrier’s current position and secure its long term sustainability, a statement said.
The funding will be used to fulfill the airline’s current debt obligations and meet its future restructuring costs.
Working together with the Government of Bahrain and its shareholder, Mumtalakat, to review its existing fleet and network, Gulf Air will implement an accelerated strategy and aggressive restructuring programme to achieve more dramatic cost and liability reductions and put the airline firmly back on the road to sustainability following a difficult 2011, it said.
The statement did not indicate when the restructuring programme will begin.
Thanking the leadership on behalf of the airline, Gulf Air CEO Samer Majali said: “The decision to provide further funding for the national carrier recognises Gulf Air’s position as a key component of Bahrain’s economy and infrastructure providing direct and indirect employment to over tens of thousands of people.
“The airline contributes hundreds of millions of dinars annually to the country’s GDP and has a positive and wider impact on several other local businesses such as hospitality, transport and tourism. Most importantly it allows Bahrain to maintain its independent destination status connecting local businesses with important regional and global markets,” he said.
The requirement for funding was a direct result of a series of unprecedented regional and economic factors, including a significant increase in fuel costs that Gulf Air faced, in common with other carriers around the world since 2011, the statement said.
Added to this, Gulf Air had specific other factors to contend with. The security situation locally and in the region meant the airline was forced to suspend eight of its most profitable destinations. Further concerns such as visa restrictions and travel bans by several countries significantly cut the number of people travelling through Bahrain, it added. – TradeArabia News Service