Wednesday, August 8, 2012

Bahrain, Merger In The Air

Speculations (read more here) about airline takeovers and mergers in Bahrain were plenty since the beginning of 2012. Things are beginning to take shape and move along. Last week the CEO of Gulf Air in a press conference said that Bahrain cannot afford two (2) airlines and that a merger is a possibility. Bahrain Air Managing Director said to Al Watan newspaper that Bahrain Air is seriously considering a merger with Gulf Air.

In the mean time Parliament has refused to allocate 646 million BD (1.7 billion USD) to Gulf air and are split between;
1- closing down the airline and starting a new one, or
2- subsidising it after restructuring it.
There is a great emphasis on the fact that Bahrain Nationals should take charge of the airline, in order to provide a long term stability at the top, and be responsible to the country for their actions.

Further, both airlines were among the finalists for the third operating airline license in Saudi Arabia (read more here). Bahrain Air will need to buy aircraft which they cannot afford if they are awarded the license while Gulf Air can move some of its fleet to Saudi Arabia to support its operation, if awarded the license.

No matter how one looks at it, things are coming to a head and pretty fast (as fast as things go in Bahrain). 

A merger is probably a reality, but
1- what would the merged airline be named, the Iconic Gulf Air or the nationalistic Bahrain Air;
2- would Bahrain Air Managing Director, Ibrahim Al Hamar be the new CEO of the merged airline (He was  
    Gulf Air's PCE for one year before James Hogan was brought in);
3- how would the government and parliament deal with such a merger in financial terms, Bahrain Air is far 
    too small to take over Gulf Air's massive debt.

Lots of questions, and as usual never a dull moment in MENA's airline scene.

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