An article yesterday by Reuters gives a bit more of an insight:
UPDATE 1-Bahrain SWF moves Gulf Air ownership to govt
* SWF moves Gulf Air ownership back to govt
* CEO says investment was not attractive enough
* Says carrier could still be privatized
MANAMA, Feb 4 (Reuters) - Bahrain's sovereign wealth fund Mumtalakat said on Thursday it would transfer ownership of the country's loss-making national carrier Gulf Air [GULF.UL] to the Bahraini government.
"Bahrain Mumtalakat Holding Company, the investment company for the Kingdom of Bahrain, announced today its intention to divest its interests in Gulf Air, Bahrain's national carrier, to the Bahraini government," the fund said in a statement.
Talal Al Zain, chief executive of Mumtalakat, told Reuters an investment in the airline industry did not fit with the fund's investment strategy.
"Given it's in the airline industry, it is not a high-return investment but more of a strategic investment," he said.
"You will never have more than single-digit returns in this industry," Talal Al Zain told Reuters over the phone.
He also said Mumtalakat had fulfilled its role in the design of Gulf Air's new strategy that focuses on regional routes.
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.
It now competes with regional low-cost airlines such as Air Arabia AIRA.DU and Bahrain Air, as well as with the state-owned airlines of its richer Gulf Arab neighbours that have large fleet expansion programmes. Small oil producer Bahrain cannot afford to plough funds into its state-owned companies to the same extent.
"Given the strategic significance of Gulf Air to the Bahraini economy and combined with the business' significant funding requirements, Mumtalakat's board of directors has decided to transfer its interests in Gulf Air to the Bahraini government," Mumtalakat said in the statement.
Gulf Air has said it expected to post an operating loss of $510 million in 2009.
Mumtalakat has said it wants to improve the transparency and efficiency of its portfolio companies, virtually all of which are in Bahrain, in order to eventually divest them and diversify by investing abroad.
Zain said the Bahraini government may still privatise the airline.
"Eventually the government might still decide to do that, everything can be privatised," he said.
As I mentioned, "Distressed State Airline Syndrome"-- it says it all. At this point the airline has been sufficiently parted-out, with assets such as the training department (the new GAA) having been spun-off as a separate company.
A successful privatization of the airline would require a major overhaul by the Government in order to make it attractive and, more importantly, sustainable. I am talking about things like a complete cultural adjustment all the way from the top government levels right down to the lowest grade employee, accounting transparency, a significant cut in staff numbers, a write-off of debts and a capital infusion. It will be expensive and painful. However, lacking that, I give Gulf Air no more than 2 years survival time as a private company.
At this point
MAHABATEN, I wonder whether a more definite resolution for Gulf Air may be in the cards. Of course, I hope to be wrong.