Gulf Air, the Bahrain-based carrier, is to get another $240m (£150m) in emergency funding from the Middle Eastern countries that own it.

Bahrain, Oman and Abu Dhabi have already injected $81.7m this year to try to stabilise Gulf Air after the state of Qatar abruptly decided to pull out of the company.

At the time, Qatar said it did not believe the company, battered by the sharp slowdown in the aviation business which was exacerbated after September 11, could survive.

The new money is intended to cover the company's deficit, while debt worth $146m will also be frozen till May next year, according to chairman Sheikh Hamdan bin Mubarak al-Nahayan.

"We are back in business," Gulf Air Chief Executive James Hogan said.

Troubles

The new cash injection - coming in two tranches this year and next - should get the airline back into the black within three years, the company believes.

It has a long road to travel to get back to regain its reputation, pummelled both by the industry-wide problems and by a fatal crash in 2000.

In August that year, 143 passengers and crew died when a Gulf Air Airbus A320 crashed into the sea off Bahrain. The question of compensation to the victims' families remains unsettled.

But reports of mismanagement have also dogged the company, while stiff competition from Dubai-based Emirates and other airlines have eaten into its regional sales.

It has yet to report its results for 2001, but 2000 produced a net loss of $98m, having made a slim $1.1m profit.

The airline has 30 planes and flies to nearly 50 destinations in the Middle East, Europe, Asia and north Africa.