Oman Air To Raise Capital By $519m As Annual Loss Widens

State-owned Oman Air is to raise its capital by OMR200 million ($519.48 million), the sultanate’s national carrier said after reporting a widening annual loss.

Following the increase, Oman Air will have 700 million shares worth OMR1 each, chairman Darwish Bin Ismail al-Balushi said in an emailed statement. The carrier did not provide further details.

Oman Air’s annual loss widened by 16 per cent to OMR113.34 million in 2013, it stated.

“The loss was as a result of our continued investment in new aircraft,” said al-Balushi.

He said the arrival later this year of the first of 20 new planes on order would “signal the start of a major new phase in Oman Air’s growth and an increase in our capacity to tackle Oman Air’s deficit and move towards profitability”.

The airline will also spin off some of its business units into separate companies. These will include its catering, duty free and air charter divisions, while ground handling and cargo handling will be the first units to be spun off.

Oman Air’s annual revenue rose 10 per cent to OMR381.7 million in 2013 as it carried carry 4.99 million passengers last year, up nearly 13 per cent on 2012.

The carrier handled 119,785 tonnes of cargo in 2013, 15 per cent higher than 2012.

Oman is under increasing pressure to rein in spending growth after expanding expenditure sharply since 2011 when there were scattered street protests demanding more jobs and an end to corruption.

The government responded to the protests by boosting welfare programmes, public sector wages and job creation schemes to ensure social peace.

The International Monetary Fund has warned Oman will have to reform its spending and find new revenue sources in the next few years to avoid falling into a pattern of ballooning budget deficits.