Mumtalakat expressed its interest to transfer the ownership of Gulf air to Government. The company took this step pertaining to losses Gulf air had been making. “Gulf Air was established as a regional airline but has struggled to find its niche. Previous shareholders Oman, Abu Dhabi and Qatar gave up their stakes, after which ownership of the carrier was transferred to Mumtalakat in 2007” (“Mumtalakat moves Gulf air ownership to Government”). Competition with bigger airlines with cheaper prices has driven this step.” Gulf Air has said it expected to post an operating loss of $510 million in 2009” (“Mumtalakat moves Gulf air ownership to Government”). “Bahrain Mumtalakat Holding Company is the investment arm of the Kingdom of Bahrain and was established as an independent holding company for the Government of Bahrain’s non-oil and gas assets in June 2006” (“Mumtalakat to Divest of Gulf Air to Bahrain Government”). The Company employs more than 4000 employees at present. “Gulf Air currently flies routes connecting Bahrain with destinations in the Middle East, Europe and Asia” (“Mumtalakat to Divest of Gulf Air to Bahrain Government”). However, it is expected that Government of Bahrain will look to the privatization of Gulf Air in future.
Growing competition between airlines and sweepingly reducing travel rates are making survival harder for aviation companies. The industry is facing competition from domestic as well as international competitors. Further subsidization of aviation industry to domestic airlines has increased pressure on private airlines. Transfer of loss making firms to Government will only shift the burden to the Government. Comprehensive strategies should be formulated at National level to assist in survival of important firms. “Mumtalakat began its structural realignment of Gulf Air in early 2009 with a global search for a new chief executive which resulted in the appointment of Samer Majali, the former CEO of Royal Jordanian, on 1 August 2009” (“Mumtalakat to Divest of Gulf Air to Bahrain Government”)
Works cited
“Mumtalakat moves Gulf air ownership to Government”. bahrainbiznews.com. Bahrain Business News, n.p.6. 2010. Web.
“Mumtalakat to Divest of Gulf Air to Bahrain Government”. bmhc.bh. Mumtalakat Bahrain investments, n.p, n.d. 2010. Web.