Abu Dhabi likely to withdraw from Gulf Air

Abu Dhabi, which owns a one-third stake in Gulf Air, is likely to withdraw from its board, that will help the emirate to focus on its own airline, Etihad.

What has been rumoured among the region's aviation officials for some time appears to be coming true, according to its officials.

A Dubai-based Gulf Air official told Gulf News yesterday requesting anonymity, "The news is all over the network - everyone is talking about it."

The Gulf Air board will meet in Muscat this week and Abu Dhabi's withdrawal is expected to be discussed at length.

"We are aware of reports regarding the shareholding of the company, but we will issue an update after the next meeting to be held this week," a Gulf Air spokesman told Gulf News, quoting James Hogan, president and CEO of the airline.

An official from the Abu Dhabi Civil Aviation Department said: "I know it is true, but at this stage nothing more can be said. A board meeting of Gulf Air later this week will be told of the decision.

"The whole matter may take up to six months to be finalised," the source said.

In a similar scenario, Gulf Air shareholder Qatar pulled out in 2002 to focus on its flag carrier, Qatar Airways.

Founded in 1950, Bahrain headquartered Gulf Air is owned equally by Bahrain, Oman and Abu Dhabi. Oman is also grooming its carrier, Oman Air, which currently is acting as a feeder service to Gulf Air's long-haul routes.

The airline came back into the black after years in the red following a three-year turn-around programme, Project Falcon.

The project, led by Hogan, also created a second livery, Gulf Traveller in 2003 positioned in Abu Dhabi in an apparent bid to satisfy the emirate's demand to have a larger share of Gulf Air's operation.

However, in November 2003 Abu Dhabi launched Etihad, which is now expanding ambitiously.

Industry observers said it made commercial sense for Abu Dhabi to withdraw from Gulf Air and concentrate on its own airline, Etihad Airways, but they raised concerns about cooperation among GCC states.

"Sure, there seemed to be a conflict of interest between ownership in two airlines for Abu Dhabi. But the equity could have remained as an investment with another GCC state. After all, Abu Dhabi has so much oil revenue," said an airline expert.

With inputs from agencies