A joint Bahraini Parliament and Shura Council Committee was established on Monday to explore whether Bahrain’s national flag carrier, Gulf Air, should be severely downsized, sold, liquidated, or either liquidating or selling the airline, then establishing a new airline.
Gulf Air has struggled to become profitable, and despite the CEO’s pledge to not “request funding from the government to support the airline’s operating losses to the tune of hundreds of millions of dollars per year,” back in May 2010. The airline requested and accepted US$1,000,000,000 in financial aid from the Bahraini government in October 2010 to keep the airline flying. Now as the airline continues to fend off formidable competitors in the region, the airline struggles to remain operationally sustainable.
Each of the options under review by the Bahraini Parliament and Shura Council brings significant financial ramifications. Reducing the size of Gulf Air’s operations could cost the company an estimated US$1.6-billion in costs associated with laying off redundant staff and terminating international contracts and partnership agreements Should the Bahraini government seek to sell off Gulf Air, assuming there is a buyer, and establish a new national flag carrier, the financial burden is decreased to an estimated US$1.2-billion.
For now Gulf Air will continue to operate as usual, but the future of Gulf Air appears to be up in the air … just as the airline tenders its bid to begin operating a domestic route network within the borders of Saudi Arabia.