THE GOVERNMENT has been urged to come up with a clear and comprehensive strategy to boost the revenues of Bahrain’s national carrier and ensure its profitability.
A parliamentary probe committee into Gulf Air’s affairs has come up with 15 recommendations which, its members believe, are instrumental to steer the company on the right path as a flagship airline.
The findings and recommendations will be debated during Parliament’s weekly session on Tuesday.
The panel, chaired by MP Mohammed Al Marafi, claimed that it has ‘sufficient statistics’ on Gulf Air’s operational spending and revenue with the information mainly in percentages.
He alleged that ‘reliable sources’ had revealed that the national carrier’s net losses had reached BD77 million ($203m).
The figure was, however, not confirmed in replies from the Gulf Air Group Holding Company or Transportation and Telecommunications Minister Mohammed Al Kaabi, who is politically responsible for the kingdom’s sovereign wealth fund Bahrain Mumtalakat Holding Company that the group comes under.
The committee has also recommended legal action against all officials responsible for the alleged losses incurred by Gulf Air.
The GDN reported in January this year that Gulf Air Group Holding Company appears to have flown out of a financial abyss by remarkably reducing its losses by around 200 per cent in four years.
Mr Al Kaabi had revealed during a parliamentary session at the time that the national carrier was on a flight path to success. And, ongoing changes within the group, which features the airline, alongside Bahrain Airport Company and Gulf Aviation Academy, will witness a further reduction of operational costs as part of comprehensive restructuring, integration and acquisition plans.
The minister wanted to correct a misconception about the size of Gulf Air’s financial woes. He said the national carrier had reduced its losses to BD30m by the end of last year compared to between BD170m to BD180m in 2020.
He added this has significantly reflected on the group with losses dropping, in general, by 203pc from where it was at that time and that they were working on further reductions.
“Gulf Air stated that its losses increased by 8.4pc in 2022 due to the Ukraine-Russia conflict, with losses dropping by 1.7pc in 2023, which we clearly see to be not much,” said Mr Al Marafi.
“We do not know the size of losses incurred by Gulf Air to date and it seems the airline doesn’t want the information to be out, as repeated queries and replies point in that direction,” he added.
“We do not know if the reasons behind the losses have been investigated internally while the law states that action should be initiated.
“The findings of an earlier parliamentary probe committee in 2022 haven’t been implemented and it had clearly demanded action against those responsible for losses.
“In any business, the board takes measures against management for failure to reach targets or if the performance is below set standards, and we do not see any such action here.
“From reliable sources, we have learnt that net losses have reached BD77m and the government or company needs to validate or deny it, which is not happening.”
He claimed that Gulf Air has not presented any performance indicators on destinations that were either profitable or making losses.
“The airline has no apparent study on profitable or losing routes and we have been hearing about future destinations, without being shown feasibility studies,” he added.
“There are other regional airlines that have taken advantage of the stopped destinations that were clearly profitable.”
Mr Al Marafi said the company has revealed that it received BD48.69m in financial support in 2023 to help implement its strategy to improve revenues and cut losses.
He added that plans under this strategy were never revealed.
“The airline has a schedule to buy new aircraft until 2026, and the purchase cost or the number of aircraft have not been disclosed yet,” he said.
mohammed@gdnmedia.bh
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