Negotiations over redundancy packages for the hundreds of Gulf Air employees set to lose their jobs are continuing as the troubled airline restructures its business.

The state-backed Bahraini airline is looking to cut its workforce by 35 per cent, which equates to 1,200 people.

As part of this process, Gulf Air has improved the terms of its voluntary retirement scheme (VRS) and is offering an enhanced package, which the airline claims is “significantly higher than the legal obligations required by Bahrain labour law”.

However, local press reports state that Gulf Air’s trade union has rejected the revised offer.

Gulf Air responded with a statement saying:“Gulf Air has not received any official communication from any of the airline’s three Trade Unions rejecting the enhanced VRS…The revised scheme has since received a positive response from employees.”

The terms of the renewed package offer employees one month’s salary for each completed year of service, plus three months’ salary as a bonus payment and payment in lieu of a notice period as defined by the employee contract.

Furthermore, staff travel benefits will be extended for six months from the employees’ final working day.

This is said to be “more generous” that the airline’s employment contracts stipulate.

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

The airline has been struggling with high fuel prices coupled with a slump in air traffic, as well as the forced suspension of destinations due to political unrest in the wider Mena region.

As part of its restructuring plans, Gulf Air has cut orders for new craft from both Airbus and Boeing. Gulf Air’s revised order book will reduce the airline’s long-term financial liability of approximately $5bn by over 50 per cent.

Further announcements regarding the airline’s restructuring are expected imminently. The dispute over redundancy packages closely follows the news that privately-operated airline Bahrain Air has closed down due to financial difficulties.