Upheaval In Bahrain

The Airline sector has been simmering for the last year. Rumors of Gulf Air's CEO resigning were all over the place, until the Board accepted it in November 2012. There has been rumors of a merger between Bahrain Air and Gulf Air with Bahrain Air Taking over the helm (The Airline Scene In Bahrain and Bahrain, Merger In The Air).

As 2012 came to a close and the CEO has finally resigned, there was all this talk about right sizing the airline and getting a Bahraini national at the helm.

Then it all came to a head in February 2013, Bahrain Air went into voluntary liquidation amid veiled accusations of the government not allowing a bail out in favor of Gulf Air. On the other hand, Gulf Air right sized, letting 15% of its workforce go since the beginning of 2013. Neither the parliament nor the unions are happy. There are calls for getting rid of expatriates instead of nationals because the savings are better, but then there are essential jobs that are performed by expatriates.

As of today Gulf Air is struggling and Bahrain Air is history, with international carriers picking up the slack and making money.

This was not only economic forces at play but political high stakes among the ruling elites in government.

Gulf Air had to survive, the government has invested too much to keep the airline going. Besides it has won the third license to operate in Saudi Arabia.

So were do we go from here. Gulf Air does not have a CEO as yet and I am sure the Board is looking for one to get the airline from the mess it is in. Parliament wantsa a national to head the airline and less expatriates hired. Things should become easier for Gulf Air but they need to pay attention international carriers.

It took a year to get to where we are at today, it may take another 6 months before things clear up

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.

The Airline Scene in Bahrain

I was in Bahrain at the beginning of the month after almost 9 years. The place has changed, malls, highways and newly developed areas reclaimed from the sea in the usual Bahrain way. I had a good time, doing business and meeting friends and relatives and did not feel unsafe at any time during my stay.

However, some things never change in Bahrain and that is stories about Gulf Air. Well, there are several stories being bandied around one of them is that the CEO will be leaving by the end of the month and the other is that some business interests have aligned with some political figures in the government to promote Bahrain Air as a replacement of Gulf Air.

Both Gulf Air and Bahrain Air had a hard 2011; in addition to the Arab Spring in key markets and problems in Bahrain, the rising fuel costs and Eurozone woes; the government banned flights to Lebanon, Iraq and Iran for a few months, all key markets for the airlines.

The future of Gulf air is being debated by a Parliamentary ad hoc committee that is reviewing options (keeping the status quo, dissolving the airline, selling it off to a strategic partner or downsizing it) presented by the government. Downsizing seems to be the preferred option provided it does not affect Bahrain nationals, a prime objective at all times. The Labor Union representing Gulf Air employees is very powerful and nothing will move forward without their express or tacit approval, a fact that should always be remembered.

Bahrain Air, a privately held airline, has the same woes as Gulf Air and could probably do with some government support.

Whether Bahrain Air can replace Gulf Air, the short answer is no; Gulf Air has a greater international
presence and operates far more international routes to Europe, Middle East, Africa and the Far East.

Another option is to merge both airlines?!

Only time will tell what the outcome will be,  but as everything else in the region, never a dull moment.

In any case, it was an enjoyable visit and I look forward to visiting again soon.