Dubai:Gulf Air on Monday said it would receive 185 million Bahraini dinars ($490.6 million) in new funding, welcoming the announcement of the issue of a Royal Decree by Bahraini Ruler, King Hamad Bin Eisa Al Khalifa.
The funds would be utilised to recapitalise the loss-making airline, in order to actively address its current position and secure its long-term sustainability, Gulf Air said in a statement. “The funding will be used to fulfil the airline’s current debt obligations and meet its future restructuring costs.”
It added that 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.
“The decision to provide further funding for the national carrier recognises Gulf Air’s position as a key component of Bahrain’s economy,” Gulf Air CEO, Samer Majali, said in a statement, adding that the carrier contributes hundreds of millions of dinars annually to the country’s GDP.
Expressing scepticism about the airline’s future despite new funding, aviation analyst, Saj Ahmad of StrategicAero Research said: “While Gulf Air has secured a new round of funding, there are still questions as to how the airline will turn itself around. And with political instability ensuing in Bahrain, any job cuts and fleet cuts is unlikely to be well received and could turn out to be a backward step.”
The carrier has been struggling financially for a while now. “For the short term, Gulf Air’s survival is ensured. Longer term and without evidence of a turnaround, the airline has to prove its worth saving — on evidence, the jury is still out on that,” Ahmad told Gulf News.