Gulf Air has welcomed the royal decree by King Hamad bin Isa Al Khalifa allocating an additional 185 million Bahraini dinar ($491 million) to recapitalise the troubled flag carrier.
"The decision to provide further funding for the national carrier recognises Gulf Air's position as a key component of Bahrain's economy and infrastructure," chief executive Samer Majali says.
The decree was issued on 10 October, an airline spokesperson confirms, following a meeting two days earlier between both chambers of Bahrain's bicameral parliament.
The government in April vetoed a 664-million dinar rescue package for the flag carrier.
At the time, some elements within parliament were calling for Gulf Air to be dissolved. The airline has missed two restructuring targets over the past decade, culminating in a full-year loss of 190 million dinar for 2011.
However, Majali has repeatedly blamed the Arab Spring uprisings for last year's weak performance, noting that the latest recovery plan succeeded in cutting costs by 25.5 million dinar.
Responding to the government's affirmation of continued support, the airline now says it will "implement an accelerated strategy and aggressive restructuring programme to achieve more dramatic cost and liability reductions".
Local media reports suggest that lawmakers debated a radical restructuring of the fleet size down from 39 to 20 aircraft, including just two widebodies for use on flights to London and Paris.
Gulf Air has outstanding orders for 20 Airbus A330s and 16 Boeing 787s, and has long been linked to a possible Bombardier CSeries order.