Tuesday, March 9, 2010

Gulf Air goes on sale

Twenty days after Mumtalakat (the investment arm of the Kingdom of Bahrain) returned the ownership of Gulf Air to the government, citing that an airline is a strategic asset that will yield very little return. The government on 25 February 2010 announced its intention to privatize the airline within one year. Well, I don’t think it will happen. Although Bahrain Air is not a major threat, carriers in the region are. Gulf Air has a few advantages:
  1. It has a restructuring plan and a vision of where it is heading
  2. It has a fleet renewal plan which is in progress
  3. It has several code sharing agreements within the region and as far afield as North America.
On the other hand it has definite problems and disadvantages:
  1. Allegation of corruption within the airline
  2. No record of profitability
  3. A very disruptive labor union
  4. A potentially explosive geopolitical situation

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