A crucial issue facing regional carrier Gulf Airhas been resolved, following the decision of Qatar to withdraw from the airline and a pledge by the remaining three shareholders to pump in fresh capital. The moves were announced after a 29 May board meeting in Abu Dhabi. The three partners - Abu Dhabi, Oman and Bahrain - are to provide BD 10 million ($27 million) each to the airline in the form of a capital increase.
'The three governments will consider compensating Qatar for its 25 per cent stake in view of the company's general situation,' Qatari Energy & Industry Minister Abdulla bin Hamad al-Attiya has been reported as saying.
The restructuring decision stands as the shareholders' response to a late-April request from Gulf Air's management for a $272.5 million capital injection (MEED 10:5:02). The $81 million capital increase announced on 29 May falls some way short of the required capital but Gulf Air sources suggest it might only stand as the first phase of a recapitalisation programme.
The board meeting also approved the new strategic plan drawn up by US aviation consultant Simat Helliesen & Eichner (SH&E) which is hoped to restore the airline to profitability. Gulf Air recorded a net loss of $132.3 million in 2001 on the back of losses of $98.1 million in 2000. The airline is also understood to have a debt pile amounting to more than $800 million.