Troubled regional carrier Gulf Air plans to launch a budget airline targeting its large expatriate worker community, mainly from South Asia.

"The new airline will operate under a new brand and target specific needs of leisure and expatriate employment segments... with competitive costs," Gulf Air president and chief executive James Hogan told a news conference.

The 2000 crash affected passenger bookings

The all-economy-class airline to be launched in June will be based in the emirate of Abu Dhabi, part of the United Arab Emirates, and be funded and run by Gulf Air.

No financial details were given.

The 50-year-old airline has been struggling because of a crash in 2000, the global aviation downturn and strong competition.

Rival regional carrier Emirates and airlines launched by two of Gulf Air's longstanding part-owners Oman and Qatar - Oman Air and Qatar Airways - have all hit passenger numbers.

Financial troubles

Mr Hogan said the company expects to halve its losses in 2003 and break even next year.

Gulf Air reported net losses of $98m in 2000 and about $138m in 2001 and has forecast a 2002 loss of $111.4m.

The ongoing losses forced one of its founding owners, Qatar, to pull out last May.

Last month the three remaining co-owners - Bahrain, Oman and Abu Dhabi - pumped $238m into the carrier to cover debts of $700m and defer debt repayments.

The cash injection accompanied plans for Gulf Air to expand its fleet and add new routes.

Mr Hogan said the airline was in talks with the four leading aircraft manufacturers to increase its fleet of about 30 Airbus and Boeing planes.

He said the fleet would be expanded to 60 aircraft by 2009.