Bahrain Air grounded
Bahrain Air ceased all operations filed for voluntary liquidation in a surprise move last night. [File photo]
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Bahrain Air last night announced the immediate suspension of all its operations, and plans to file for voluntary liquidation. The decision was taken yesterday after an extraordinary general meeting with shareholders.
Around 300 staff are set to lose their jobs, said a report in the Gulf Daily News (GDN), Trade Arabia's sister newspaper.
In a statement, the airline said it had suffered massive losses as a result of unrest in 2011, which led to profitable routes being cancelled and a general drop in passenger traffic through Bahrain.
However, it claimed it was also facing restrictions as a result of outstanding debts to the government, which it said had cost it BD4.5 million in lost revenues over the last three months alone, the GDN report said.
"We are very sad and frustrated at the same time as Bahrain Air was not given approval for enough routes and had to make payments upfront, which meant shareholders had to put in money from their side," Bahrain Air chief executive officer Richard Nuttall told the GDN last night.
He said shareholders decided against a new cash injection and have instead opted for voluntary liquidation.
Staff facing the axe will be fairly compensated, the CEO said.
"We have close to 300 airline staff who will be affected by this decision. We are working on guidelines to ensure they will get what they deserve," Nuttall said
He added that all of the carrier's aircraft were leased and the process of returning the planes would start shortly.
Meanwhile, passengers holding tickets for travel from today have been told they will have to make alternative arrangements themselves and e-mail any claims for compensation to firstname.lastname@example.org or send them by post to Mourad Consultancy, which has been appointed as the liquidator.
Claims can also be posted to the airline itself.
"Closure of Bahrain Air means that all operations, including administrative operations, have ceased completely," it says in a message on its website.
"As such, no employee of Bahrain Air can provide refunds or provide you with an alternative airline ticket.
This process is now governed by Bahrain's bankruptcy laws, in accordance with Bahrain's Commercial Companies Law.
"If you have not completed your journey, you will regrettably have to make your own arrangements and purchase new tickets, if necessary.
"A decision will be made on all claims, including ticket refunds, in the near future based on the findings of the liquidators."
The airline said it had applied for compensation for lost revenues connected to unrest based on a Royal Decree issued in 2011, but had not received any payment to date.
"The airline is now being required to make immediate payments on past government debts or face closure, at the same time as having its scheduled operations - both destinations and frequencies - being reduced considerably by the Civil Aviation Affairs in the Ministry of Transportation," it said.
"This effectively strangles the airline by simultaneously requesting payments and reducing its ability to generate the necessary revenues both to make these payments and to sustain long term profitability."
The GDN reported on February 4 that the carrier's operational licence, which was issued by Civil Aviation Affairs five years ago, had not been renewed and its Air Operator's Certificate was only extended for two months by Civil Aviation Affairs - as opposed to one year - and was due to expire next month.
"After meetings, the latest company proposal was forwarded (to aviation authorities) last Thursday (7th February)," says the airline's statement.
"During the EGM, a very negative response was received providing only minor route concessions in return for payments of over BD4m.
"In the circumstances, given the position of the (Transportation) Minister, the shareholders decided they had no option but to discontinue financial support and put the company into voluntary liquidation."
Then Energy Minister Dr Abdulhussain Mirza announced in parliament last May that Bahrain Air had an outstanding fuel bill of $20m (BD7.56m), while Gulf Air owed Bapco $173m (BD65.93m).