Dear Valued Partner,

It is with great sorrow that I must advise you that Bahrain Air held an Extraordinary General Meeting today at which the shareholders made the decision to announce the company’s immediate suspension of operations and to file for voluntary liquidation in accordance with the Kingdom of Bahrain's Commercial Companies Law.

The company sustained considerable financial losses as a result of the unstable political and security situation in Bahrain. In 2011, during Bahrain’s State of National Emergency, the airline was instructed to suspend flights to several destinations, and also suffered from the lack of traffic to and from Bahrain, and from the restrictions on the Saudi Causeway. Despite the Royal Decree number 18 for 2011 Article 5/10 that regulates land, sea and air transportation during Bahrain’s State of National safety stating that all affected parties will be fairly compensated, the airline, despite making official claims, has received no compensation.

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. 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. The shareholders of the company have spared no effort to support the airline financially since its inception and to support the airline and Bahrain through the unrest in 2011. The airline has also spared no effort to negotiate a solution with the Minister of Transportation (who is also an active board member of Gulf Air). However, he has shown no inclination to provide a meaningful solution. His decisions to restrict route approvals have cost the airline BD 4.5 million in lost revenues over the last 3 months. The position of the Minister was made clear when, during a time of negotiation, he only extended the company’s AOC, after operational audits had been passed, for two months instead of one year. After meetings, the latest company proposal was forwarded last Thursday 7th February. During the EGM, a very negative response was received providing only minor route concessions in return for payments of over BD 4 million. In the circumstances, given the position of the Minister, the shareholders decided that had no option but to discontinue financial support and put the company into voluntary liquidation.

Today is a sad day for all of us. Together with your support, we helped promote Bahrain as a business and leisure destination and Bahrain International Airport as a passenger hub in line with the Kingdom’s Economic Vision 2030. Together we demonstrated that it is possible to provide high quality and reliable scheduled airline services at a fraction of the costs achieved by state airlines if fair practices and equal opportunities are rendered. We would like to thank you for all of your support, efforts and patience working with us to build an airline that we can all be proud of.

We understand that some of you will still have outstanding claims or other matters that you would wish to settle with the company. Unfortunately, closure of the airline means that all operations, including administrative and accounting operations have ceased completely. This process is now governed by Bahrain’s bankruptcy law in accordance with Bahrain Commercial Companies Law.

Liquidators have been appointed by the Bahrain Air shareholders at the EGM held on 12/2/2013 and any outstanding matters can be dealt with by emailing claims@bahrainair.net or by sending a letter to:

The Liquidator
Mourad Consultancy (S.P.C.)
P.O. Box 3266
Manama, Kingdom of Bahrain

OR

Bahrain Air Company BSC(C) (“Under Liquidation”)
Mohamed Centre 151
Road No. 44
Arad 243, Muharraq
Kingdom of Bahrain
P.O. Box 23736
Fax: 17463331

Everyone at Bahrain Air apologizes unreservedly to all parties for the inconvenience and disruption this will cause.

Again, I would like to reiterate my thanks and the gratitude of all who were part of this airline for all your support over the last months and years.

Yours Sincerely,

Richard Nuttall
CEO
Bahrain Air Company B.S.C.(C)

(“Under Liquidation”)