Troubled Gulf Air to get $159.2 million cash injection
The owners of Gulf Air agreed on Wednesday, May 30, to inject 60 million Bahraini dinars ($159.2 million) into the regional airline to help it overcome financial difficulties.
Sheikh Ahmed Bin Nasser Al-Thani, who currently holds the rotating seat of chairman on the Gulf Air board, told reporters that the governments of Oman, Bahrain, Qatar and Abu Dhabi emirates in the United Arab Emirates would each extend 15 million dinars to ease a cash crunch and contain accumulated losses.
Sheikh Ahmed, who is also Qatar's communications and transport minister, said the cash injection would be enough to meet the airline's operating commitments this year and to cover losses which he put at 99 million dinars by the end of 2000.
Sheikh Ahmed was speaking after a meeting of Gulf Air's board of directors in Abu Dhabi to discuss recommendations submitted by an external auditor. Bankers recently put Gulf Air's debts at around one billion dollars.
An airline official earlier this month attributed the financial difficulties mainly to fuel price rises and growing competition. Gulf Air has not disclosed its 2000 results. In 1999, it recorded a net profit of 400,000 dinars, sharply down from $10 million in 1998.
Sheikh Ahmed stressed that none of the four owners of Gulf Air had any intention of selling their stakes. He said the board of directors had set up a committee to study measures needed to guarantee that no further losses are incurred, including reducing the number of destinations and cutting back on the number of employees.
Sheikh Ahmed said the airline, which operates a fleet of 30 aircraft, would consider whether to lease or purchase aircraft. He did not elaborate. Dubai-based Emirates airline and Qatar Airways began flights to Bahrain last year, putting more pressure on Gulf Air. ― (Reuters, Abu Dhabi)
© Reuters 2001
© 2001 Mena Report (www.menareport.com)