Bahrain's struggling Gulf Air cuts staff as unions reject revamp

Bahrain's loss-making flag carrier Gulf Air, struggling against competition from other regional carriers, has embarked on a sweeping restructuring plan.

Gulf Air closed four more routes in January as it pressed ahead with a restructuring plan that it launched a month earlier. Hamad I Mohammed / Reuters

's loss-making flag carrier

, struggling against competition from other regional carriers, has embarked on a sweeping restructuring plan that has annoyed unions over heavy job cuts.

The company said this week it had sacked 15 per cent of its staff and closed four more routes in January as it pressed ahead with a restructuring plan that it launched a month earlier.

The carrier, one of the Gulf region's oldest airlines, has been struggling to cut losses mounted by stiff competition from fast growers like Dubai's

, Abu Dhabi's

and

, as well as rapidly expanding budget airlines like flydubai and Air Arabia.

It has also been hit by the country's political and security uncertainty that took a heavy toll on the economy due to protests that erupted in February 2011, and continue despite a deadly crackdown in March of the same year.

Gulf Air was established in 1974, Abu Dhabi, Oman and Qatar partnering with Bahrain. By the early 1990s, it had become the largest Middle East carrier.

But its star shone only briefly. By the middle of the decade, it started to lose ground because of an economic downturn in the

-producing region and competition from new carriers.

Bahrain's erstwhile partners divested and focused on building their own airlines, leaving Manama to bear the losses.

A number of chief executives have been successively hired to restructure the carrier, including former Royal Jordanian chief Samir Al Majali who resigned just months ago after failing to replicate his success in revamping Jordan's flag carrier.

Precise figures are unavailable, but Bahrain sovereign wealth fund Mumtalakat said last year that it lost 270.6 million Bahraini dinars in 2011, due mainly to Gulf Air.

The revamp aims to redraw the airline's network, focusing on point-to-point routes, as well as resizing the work force.

"In January a total workforce reduction of 6 per cent was realised. This to date has increased to 15 per cent," Gulf Air said on Monday.

This is being achieved through non-renewal of contracts, restructuring in outstations, natural attrition and a voluntary retirement scheme.

But Gulf Air's union is not happy, and is in talks with the labour ministry, but has not said what action it might take.

Bahrain is one of few Gulf nations that have strong labour unions that can take industrial action.

Union spokesman Mohammed Mahdi said the company aims to dismiss a total of 1,266 employees in the first stage of restructuring - 600 Bahrainis and 666 foreigners.

"That is more than 30 per cent of the total workforce of 4,000 employees," he said.

* AFP