Gulf Air's efforts to restore itself to profitability could leave the regional airline with two scenarios: success or replacement by a Bahraini airline company, according to reports.

The new strategy, to be implemented by the Canadian aviation consultancy Simat Helliesen and Eichner (SH&E), calls for a comprehensive change of job structure, a new network plan, the restructuring of its fleet and a re-assessment of staff, reports in Bahrain and London press have said.

Gulf Air's deficit currently stands at around $100 million and the four owner countries have said they will pay only if the first stage of the strategy is successful.

The airline had made efforts last year to improve its performance and cut expenses, paying $159 million to cover its deficit. However, the amount has been exhausted mainly by the airline's operational costs.

If the strategy is successful, the owner countries will accept paying their dues. However, if the strategy fails, then a new airline project will be revived. The Delmon Air project, which is currently frozen, calls for the setting up of a Bahraini airline with Cathay Pacific owning 25 per cent of the stake, London-based Al Hayat newspaper said.

The strategy will include amending the position of chief executive and president to just chief executive and eliminating the positions of assistant managers.

Gulf Air's chairman Shaikh Hamdan bin Mubarak Al Nahyan recently told staff in a video broadcast that the airline was facing its toughest challenges in its 50-year history.

The airline faced continued crisis, despite the cash injection being granted by the owning states last summer, he told the staff.

But he stressed that he was convinced Gulf Air would get back on top of the challenges.

"Gulf Air during the last 50 years proved to have the potential to stand firm. Although it has faced in certain years some difficulties, it has managed to vanquish them and remained committed to its duty," said Shaikh Hamdan, according to the statement from the airline.

He said the airline's board had made the following decisions based on recommendations by SH&E: