Gulf Air’s main trade union has rejected the airline’s redundancy package offers and is calling for the carrier to bring its restructuring process to a halt.

Spokesperson for Gulf Air Trade Union (GATU) Mohammed Mahdi, tells MEED that there is “no real justification” for restructuring plans that will see 1,200 jobs cut.

Mahdi says the restructuring could have a negative impact on Bahrain’s economy and could create a “new crisis” for the country. Mahdi is also the assistant secretary general of the General Federation of Bahrain Trade Unions.

His comments follow an official statement issued Gulf Air that states that only two months into the restructuring process, the financially troubled airline is already beginning to reduce its losses.

The airline has said it has reduced its overall losses by 34 per cent compared to the same month last year, and increased its passenger revenue by 9.6 per cent against its budgeted revenue.

Part of its cost saving drive is a plan to cut over a thousand jobs, via a number of measures including non-renewal of contracts and a voluntary retirement scheme (VRS). However, such plans have been condemned by unionists.

The airline revealed details of a second version of the VRS a week ago after the first version was rejected by workers. The new redundancy package offers employees one month’s salary for each completed year of service, plus three months’ salary as a bonus payment and payment in place of notice periods.

Yet this revised offer will also be rejected by the airline’s trade union, Mahdi confirms.

Instead, GATU is asking for employees to be offered two months’ salary for each completed year of service. This demand comes in spite of Gulf Air statements that say that the redundancy offer is “significantly higher than the legal obligations required by Bahrain labour law”.

As well as improving redundancy package terms, Mahdi argues that Gulf Air needs to revise all its restructuring plans, particularly given recent developments in Bahrain.

He argues that despite political unrest the country’s economy is relatively healthy, citing a new report from Bahrain Economic Development Board released in February that says the country’s economic growth in 2012 stood at 3.9 per cent.  

“We are asking Gulf Air why do you still insist to go forward [with the restructuring]?” he says.

The recent collapse of the privately owned Bahrain Air is also seen as another reason to stop job cuts, with the state-backed Gulf Air being the likely contender to absorb Bahrain Air’s market share.

Both Gulf Air and Bahrain Air ran into trouble in 2011. Already struggling with high fuel costs, both airlines saw their routes cut by the government during the political uprisings seen that year. The Bahraini authorities banned flights to and from countries such as Iran and Iraq, due to fears that insurgents would fly into the country and incite further rioting.

Unfortunately those same routes were the airlines’ most profitable destinations.

Gulf Air had to be bailed out by the government in October last year with a cash injection of BD185m ($494m).

In contrast, Bahrain Air entered voluntary liquidation earlier this month due to the increasingly unmanageable burden of debt it had.

Under Gulf Air’s restructuring, it is reviewing its network of destinations, aiming to complete this process by March 2013.

The airline is also reducing its fleet to 26 aircraft, with all negotiations due to be completed in April 2013. In January it concluded a deal to return two leased regional Embraer E90 jets.

To-date the airline has already reduced its workforce by 15 per cent.