Bahrain-based Gulf Air has signed a $32 million financing facility with Standard Chartered Bank. 'The package was originally going to be a $15 million working capital facility,' says a Gulf Air official. 'But two other components were added.'

The $15 million one-year revolving loan was joined with a $2 million letter of credit facility, and a $15 million foreign exchange facility. 'The pricing of the deal has not been released, but it is based on Libor and very competitive,' says the official.

Gulf Air is anticipating an operating loss during 1999, but says it is set to break even in net income and will return to profitability in 2000. Margins have been affected by yield declines and rising jet fuel costs. 'The airline is offsetting losses by rationalisation and cost cutting. For 2000, a recovery is expected,' said Walter van West, Gulf Air's vice- president for finance, strategy and information technology on 7 December, after a quarterly meeting of the airline's board of directors.

However, van West said Gulf Air's off balance sheet debt will rise further next year after the delivery of the last two of six A330 aircraft bought from the European consortium Airbus Industrie for $600 million. Total debts stood at $650 million at the end of 1998 when the airline announced a $10 million profit. In the mid-1990s, the company's debt totalled some $1,500 million, and despite the expected increase, it will remain under $1,000 million, says van West.