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Gulf Air confirms plan for Bahrain to take control
David Kaminski-Morrow, London (18Apr07, 08:26 GMT, 276 words)
Middle Eastern carrier Gulf Air’s investment programme will be driven by Bahrain’s Government, which is taking an 80% share of the airline’s ownership.
The carrier, previously owned equally by Bahrain and Oman, is planning to invest at least BD310 million ($822 million) in a programme to reverse heavy losses and return it to profitability.
There have been suggestions that Gulf Air’s ownership would change with any capital injection, and a spokeswoman for the carrier says the airline’s senior executives are now openly referring to Gulf Air as being an 80:20 company with Bahrain the larger partner.
Gulf Air has been turning in a poor financial performance for several years. It achieved a marginal profit in 2004 under a restructuring plan implemented by then-CEO James Hogan but subsequently turned in a BD85.5 million loss the following year.
In 2006 this deepened to nearly BD130 million, against a budgeted profit of BD26 million, and the airline recorded a 4% fall in passenger numbers.
New chief Andre Dose says that the situation at Gulf Air is “more dramatic” than he had expected, and that the airline’s financial situation is “critical”.
Gulf Air’s restructuring programme, which focuses on 12 main areas, aims to cut costs by BD66 million, through such measures as simplifying and reducing the fleet and axing jobs, and generate an extra BD90 million in revenues through improved sales and network refinements.
Dose says this will close a “profitability gap” of BD156 million.
Initial effects from the restructuring will become visible in the next three to nine months, he says, while other longer-term initiatives – such as the fleet revamp – will take up to three years to implement completely.
Source: Air Transport Intelligence news
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Gulf Air overhaul to slash long-haul routes and axe jobs
David Kaminski-Morrow, London (17Apr07, 13:22 GMT, 287 words)
Middle Eastern carrier Gulf Air has given further details of its new BD310 million ($822 million) two-part restructuring programme, warning that achieving profitability will mean slashing long-haul routes and sacrificing jobs.
Gulf Air admits that it is losing more than $1 million per day and that its “profitability gap” amounts to BD156 million.
It is to axe its loss-making long-haul operations to Hong Kong, Sydney, Singapore, Johannesburg, Jakarta and Dublin in order to concentrate instead on the Middle East region.
The airline’s newly-appointed chief, Andre Dose, says that the first part of the restructuring programme – costing BD120 million – will focus on creating a network which better serves the Bahraini and Omani business community.
Dose states: “The main goal of our restructuring and customer service programme is to increase flight frequencies to existing key destinations and to add new connections to major economic centres that are of growing importance for the economy of Bahrain and Oman.”
He says that Gulf Air will offer at least two flights per day to each main destination in the region, adding: “The introduction of a ‘wave structure’ of inbound and outbound flights will also allow us shorter connection times and ensure better connectivity with our Asian and European long-haul flights.”
The airline is cutting back its fleet to 28 aircraft and Gulf Air deputy chairman Mahmood Al Kooheji warns that this will mean a “painful” number of job losses. Gulf Air employs nearly 6,000 staff but has yet to indicate how many personnel will be cut.
Gulf Air’s restructuring will also feature a second parallel programme, costing BD190 million, aimed at improving the quality of its product. This will involve such measures as refurbishing its aircraft interiors and modernising its passenger facilities.
Source: Air Transport Intelligence news