President Gayoom returned from his trip to the Gulf this weekend claiming that Qatari officials were ready to begin deliberations on establishing a national airline in the Maldives.

Foreign minister Dr. Shaheed was also quoted in the pro-government Haveeru newspaper saying that 'the Emir of Qatar ordered them to finalise this as soon as possible. I envisage that the studies will be completed in about 3 months. This is a business relationship and will depend on the outcome of the studies.'

Air Maldives, the former national flag carrier founded by President Nasir in 1974, was sensationally declared bankrupt in March 2000 with losses estimated at $50 million.

In late 1999, the airline had launched commercially unviable routes to major destinations in Europe and Asia using three new Airbuses, each leased for $1 million a month.

Soon after Air Maldives director and NSS leader Anbaree Abdul Sattar signed the agreements, the airline was forced to cease all local and international operations.

The scandal was never fully investigated, in particular the role played by Malaysian tycoon Tajudin Ramil. Since 1994 the airline had operated as a joint venture, with Ramil's company 'Naluri' holding a 49% stake. Ramil was the biggest shareholder of Malaysia Airlines at the time and took over the day to day running of Air Maldives.

The government accuses him of making the decisions that led to the carrier's downfall.

Critics say that Gayoom wanted a prestige international airline at any cost and turned a blind eye to the company's shady financial operations.

During his week long trip to the Gulf, the President also called for aid to help the government reduce the budget deficit and offered investment opportunities in the tourism sector.