Gulf Air bailout plan rejected
Published: May 17, 2012
Courtesy, Gulf Air
Gulf Air (GF) is awaiting the result of deliberations in the upper house of Bahrain’s National Assembly after the lower house rejected a government proposal to recapitalize the beleaguered national carrier ( ATW Daily News, Dec. 21, 2011 ).
The proposed bailout of BD664 million ($ 1.75 billion) came after several years of heavy losses for GF, which has gradually shrunk over the past two decades as former partners Abu Dhabi, Oman and Qatar pulled out of the airline to set up their own carriers.
GF has expressed disappointment at lawmakers’ rejection of the government proposal but noted its referral to the upper house and said it “looked forward to a resolution that will actively address GF’s current position and secure its long-term sustainability.”
The carrier said it had been hit by “a series of unprecedented regional and economic factors,” notably rapidly rising fuel costs and the effects of the Arab Spring. The latter factor has not only resulted in considerable local unrest against Bahrain’s minority Sunni Moslem ruling family and upper classes by the Shia majority population but sharply reduced passenger numbers to and from nearby nations in 2011.
According to local press reports, a parliamentary committee was severely critical of the carrier’s management, calling for a new chief executive with more than 20 years’ experience to replace CEO Samer Majali, who joined GF from Royal Jordanian in 2009 and has been fighting to cut losses and re-position GF as a carrier with a greater regional bias.
The committee also called for the prosecution of airline officials for allegedly squandering public money.
It also called for an end to external interference in GF’s affairs.
A GF spokeswoman said Wednesday it was uncertain when the upper house, the Shura Council, would deal with the matter.