Bahrain Air announced the immediate suspension of all its operations, and plans to file for voluntary liquidation. The decision was taken Tuesday after an extraordinary general meeting with shareholders.
Around 300 staff are set to lose their jobs, said a report in Gulf Daily News (GDN).
The airline said it had suffered massive losses as a result of unrest in 2011, which led to profitable routes being cancelled and a general drop in passenger traffic through Bahrain.
However, it claimed it was also facing restrictions as a result of outstanding debts to the government, which it said had cost it BD4.5 million in lost revenues over the last three months alone, the GDN report said.
“We are very sad and frustrated at the same time as Bahrain Air was not given approval for enough routes and had to make payments upfront, which meant shareholders had to put in money from their side,” Bahrain Air Chief Executive Officer Richard Nuttall told GDN.
He said shareholders decided against a new cash injection and have instead opted for voluntary liquidation.
Staff facing the axe will be fairly compensated, the CEO said.
He added that all of the carrier's aircraft were leased and the process of returning the planes would start shortly.
The airline said it had applied for compensation for lost revenues connected to unrest based on a Royal Decree issued in 2011, but had not received any payment to date.
“The airline is now being required to make immediate payments on past government debts or face closure, at the same time as having its scheduled operations - both destinations and frequencies - being reduced considerably by the Civil Aviation Affairs in the Ministry of Transportation,” it said.
“This effectively strangles the airline by simultaneously requesting payments and reducing its ability to generate the necessary revenues both to make these payments and to sustain long term profitability.”
February 4, GDN reported that the carrier's operational license, which was issued by Civil Aviation Affairs five years ago, had not been renewed and its Air Operator's Certificate was only extended for two months by Civil Aviation Affairs - as opposed to one year - and was due to expire next month.