Gulf Air board to eye new cash for troubled airline
Gulf Air's board will discuss a plan next week to inject cash into the regional airline, which faces financial difficulties mainly because of fuel price rises and growing competition, a company official said on Tuesday, May 22.
"Gulf Air has been negatively affected by the continuous increase in fuel prices, which at one point reached over 42 percent compared to previous years," the official told Reuters. "The airline has also suffered from deteriorating yield as a result of growing regional and international competition," he said.
Gulf Air's board of directors will meet in Abu Dhabi next week to discuss recommendations submitted by an external auditor to inject much-needed funds into the airline to ease a cash crunch and contain accumulated losses, the official added, without giving figures.
Bankers recently put Gulf Air's debts at around one billion dollars. The official said the recommendations focused on supporting the Bahrain-based airline and boosting its capital through a number of options, to restore its strength.
"The board of directors is expected to adopt during the coming meeting...the proper decision which ensures the continuity of the airline and achieves its desired progress. The ongoing, effective and confirmed support of the four owner states for Gulf Air will always contribute to enabling the airline to forge ahead with steadfastness," the official said.
Gulf Air has not disclosed its 2000 results. In 1999, it recorded a net profit of 400,000 Bahraini dinars ($1.1 million), sharply down from a $10 million in 1998.
Dubai-based Emirates airline and Qatar Airways began flights to Bahrain last year, putting more pressure on Gulf Air.
Gulf Air is owned by the governments of Bahrain, Qatar, Oman and Abu Dhabi emirate in the United Arab Emirates. It operates a fleet of around 30 aircraft. ― (Reuters, Manama)
© Reuters 2001
© 2001 Mena Report (www.menareport.com)