Gulf Air says that its state shareholders have agreed to $200 million in fresh funding, ending months of boardroom negotiations over shoring up the carrier's crisis-hit finances.
The deal was finally struck at a board meeting held in Doha, Qatar, in April. Chief executive Shaikh Ahmed bin Saif Al Nehyan emerged from the talks saying that a "loan" had been granted by its four state shareholders - Bahrain, Qatar, Oman and the United Arab Emirates (UAE) - although details of the deal have not been released.
Shaikh Ahmed says the four states have also agreed to safeguard the airline's traffic rights and have given commitments to expand the airline, countering speculation that some shareholders were becoming lukewarm on Gulf Air. The new funding had been repeatedly delayed as Oman and Qatar, which both have their own emerging carriers, declined to join in a capital injection or to see Bahrain or the UAE increase their holdings.
Gulf Air was forced to ask for the cash injection in the wake of heavy losses, which were uncovered a year ago and led to Shaikh Ahmed's appointment. Debts were at around $2 billion, because of the carrier's aircraft-acquisition spree.
A radical cost-cutting plan was quickly put in place, including route closures and the disposal of six of the 17-strong Boeing 767 fleet. Gulf Air says that the disposals are now complete.
Despite the cutbacks, which reduced the fleet by 14%in 1996, Shaikh Ahmed says that the carrier's sales increased by 5%to around 360 million Bah Dinar ($955 million) and passenger numbers edged up above 5 million.
Operating losses were trimmed to 25.2 million Bah Dinar down from 61.9 million Bah Dinar in 1995. Costs were down by 5%in spite soaring fuel prices.
Source: Flight International
