Is Gulf Air being taken for another ride ?

[left_to_first_class]

The word amongst the Bahraini staff is that AD is going to line his and his mates pockets the same way as JH did.
Rumour has it that he's on BD40,000pm + housing + other allowances (I bet if JH is reading this he'll be fuming as he was on less !!!).
Also, leaked from Finance, is that within days of AD's arrival, out went the S-class Merc that JH had and in came a BD35,000 top of the range Range Rover imported from Qatar. Well I checked out the range rover story, and yes its parked in the PCE spot, along with the S-class.

Too add to this, his former consulting firm Roland Berger is doing a lot of work at GF and guess what, these consultants are getting paid a fortune - $1M a month.

COO (or EVPO), another mate of AD, is on BD20,000 pm + allowances, and this is before you include the like of Chris Walton (Chief Restructuring Officer) and the other hanger-ons.
I suppose the only good thing is that at least these hanger ons are better than JHs'.

So hundreds of jobs are going to be cut to make this company profitable but surely AD should lead by example ? Give back the range rover and drive a Japanese car like the rest of us.

Do I see another Swiss Airlines in the making ?

[bus787]

At Last people are starting to wake up to reality.
Yes it is true a gud CEO should have his own people but why do they have to live in all this luxury.?
Anybody who tought the new CEO will do all this as Charity for the love of GF is wrong.
No clue what package he is on.Mind you if he can manage to make Profit than he deserves it .
Sim Building for Sale?? couple of millions for the books.
Gf will again have to find for Sim slots .Renting a bed in my own Home.interestng,:D

[Panama Jack]

I agree with bus787. However, if Mr. Dosé reaches the stated objective of a profitable airline within 3 years with 5% annual return (and I don't mean through voodoo bookkeeping or selling family jewels), then I will say "he deserves it."

[Fool 'n' Tameez]

I have no problem with people being rewarded hansomely for turning round a company, but those rewards should come when they achieve their targets, not before. I'd rather Mr Dose have a smaller salary and a generous bonus or other form of PRP.

[boiler]

ok so let us do some math here. if AD is getting 40k, and the coo another 20k, those two are equivalent to 120 local employees (assuming 500/month salary) and this does not even include all the other allowances and cars, and all the other guys he still did not get that he will pay very high salaries. So no big difference between him and JH. Frankly, if you are trying to cut costs and show everyone that you are trying to make a profitable company, this is not the way to do it (esp if u are planning to cut 40% of your workforce). Looks like more money down the drain for GF. What's new?

[Icarus]

Couldn't agree LESS!
AD et-al only need to cut operating losses by a little over 3% to pay their way. Geting rid of the large loss making routes (US$80M) rather than letting one's ego run wild and maintain them will inevitably produce that and more anyway - it's about time GF faced up the the harsh realities of running a succesful business and took the very difficult decisions required to do so.

It's been a long time coming and thank goodness it has finally arrived.

[Desert_Storm]

The ball is rolling. Tough times for corrupt personnel to come. Way to go AD!!!!!
:D

[boiler]

AD et-al only need to cut operating losses by a little over 3% to pay their way.
I am interested in how you got to that conclusion. Can u please post how you managed to calculate that given GF lost 135M last year?

Geting rid of the large loss making routes (US$80M) rather than letting one's ego run wild and maintain them will inevitably produce that

I think it is always the easiest thing in the world to blame network, and not the way finances are done in a company. Let me give an example.

Let us take the SYD route which the last I heard was making 10M loss. Now, in the airline business, revenue on such a route is pro-rated. i.e., revenue is split between this route and all the other routes it feeds. This is called network benefit. If SYD is giving 9M to all other routes (network benefit) it is feeding, then canceling SYD will not mean u are saving the 10M. If fact, you will save only 1M. This is because while u are saving the 10M in cost, u are also losing the 9M revenue of the network benefit.

GF have the Sabre forecasting tools, and I assume you will easily see how SYD helps your network and what effects it will have when it is removed. Looking simply at the the P/L by leg may not give u the entire picture and could make a lot of (incorrect) decisions based on incomplete info.

Just my 2 cents. Nothing personal here guys, I am only interested a good honest conversation.

[old,not bold]

Never in the history of time has any CEO produced a good performance when he's paid in advance for doing that. Incentive is the word; "If and when you succeed, you'll get paid". I am not holding my breath for M Dose to do that.

Incidentally, the last really competent CEO Gulf had was the great Alan Bodger, back in the mists of time. An accountant who could fly and knew how to deal with the shareholders. Gulf made a good profit in his day, and has never done that since.

He remarked one day, puffing hard on his cigar to keep it going properly as he rotated the F27 he was flying at the time on a scheduled service, having replaced the sick Captain at 5 minutes notice, "Remind me where we're going".

It was a phrase we often used as the lunatics took over the asylum after he quit/was pushed, and as far as I can see they are still there.

[rduarte]

40000 BD how much is that in € or US $ ?

[tbaylx]

Around 106 000 USD/month :eek: must be nice, that'd sort a few of my issues out

[awss2]

What often happens on this thread is people forget to look at the complete picture, boilermaker is right in terms of finances but what does it matter what AD makes, if at the end of the day he gets the company back on track.

bodger was right for his time being pushed away is simply what would be expected with all interests involved though I am not saying right.

The problems GF faced for many years with so many deciding is that PCEs were always chosen on a compromise hence the results that followed.

for the first time in it's history since the bodger days GF has a PCE who was not chosen out of compromise and who is given clear directives to sort it out, let us just hope he can and pulls it through.

Tired of the whining of Expats and locals alike and this political placement of incompetent buggers who do f all.

Gf needs effective competent and focused staff with one common vision, corruption needs rooting out and further any malpractice when found prosecuted.

Forward facing staff needs to be made accountable for their actions and audited on a regular basis, dismissal for theft abuse and misbehaviour should be put into practice. Let us see heads roll.

[ironbutt57]

If it's a ride we're being taken on, then it's a long over due one..lets hope it builds to the "brand enhancing" successes of our former CEO I'm confident that the Sabre info has been properly acted on...lets wait and see...:ok:

[Icarus]

BoilerMaker - shame your friends in Network never read Charles Dickens.

"Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

Let's now put that another way..
" Annual network contribution 9M cost of operation 8M, result happiness. Annual network contribution 9M cost of operation 10M, result misery!"

i.e. Gulf Air as it is today!" Losing US$1M a day! Thank heaven AD et-al addressed the network first. Perhaps you might be kind enough to ask your buddies in Network to start looking for a job elsewhere - GF needs people with at least a modicum of business/common sense if they are to survive!

My math?

Assuming as posted..
AD US$1.2M BN US$0.6M Consultants US$12M per annum = US13.8M
And as..
GF loses US$1M per day or US$365M per annum. 3% is almost US$11M

Therefore, if AD et al were to reduce losses a little over 3% - granted nothing gets better - but net cash flow stays the same; i.e. they pay their way.

Which is clearly more than your friends in Network are doing!

As for SABRE APM - you can have all the tools in the world, but if you don't know how to get the best out of them you may as well not have them. GF never have used that particular application very well at all, assuming it actually can do what it is marketed as being able to do - something that particular company are good at (marketing) but are not very good at delivering what is marketed.

[Desert Diner]

So what you are saying is that you have to hire someone at $1.2MM p.a. to figure out the company is losing $365MM p.a. and because of that high salary he will take the right steps to stop the losses.:confused:

JH must have been paid only Sharwarma money then as he obviously didn't realize the magnitude of the loss or knew the right steps to stop the losses:uhoh:

This kind of reminds me of the old CEO of US Airways who's salary just about surpased the combine salaries of all the CEO's of the other major US airlines and at the same time the US Airways CASM just about equaled the combined CASM of all the other major US airlines (Note: This is an exageration to make the point). He had a solution alright, sell the airline to United:ugh:

Running an airline is not rocket science, its all about CASM. RASM is pretty well fixed, even for the ME, so you have to reduce CASM as much as you can while still being able to attract the punters to fill the seats. You need, clean and fresh looking planes.

As for AD's salary, who can blame him. The shelf life or a CEO in a company losing $365MM p.a. must be pretty short.

[boiler]

Say what want Icarus, it was never a network problem in the first place, rather, how finances and cost allocations are done, idiots at various departments who are getting very high salaries and are good for nothing, not to mention all the other people robbing GF blind. As I said in the beginning, it is so easy to blame network for everything. Time will tell I was right. Also remember that GF was always under pressure from the BAH and MCT governments to operate flights whether they like it or not to certain destinations (regardless of profitability). All hell would break loose if one tried to switch a flight from MCT to BAH for example even though it is very obvious that having most flights from BAH is more logical and better to begin with. AD now has a carte-blanche as BAH is now planning to take over 80% and later 100%, and this is something the network people never had. As far as I know, GF hired numerous consultants for advice on network and not one was able to find anything wrong with the way it was scheduled (given the constraints that they were under). As I also mentioned before, unless u have ample experience in networking and its finances and intimate knowledge of passenger traffic flows, you will be easily be misled when looking at simple the p/l of separate flight legs, and your post has proven that.

[RevMan2]

One truth is constant: a fool with a tool is still a fool

[Trader]

You only have to look at their new wave system to realize that they are designing a sked that fits the realities of the world. This is a departure from the old system where the sked was designed politically.

Not only are they consolidating routes by dropping unprofitable ones but the new sked is about 5 aircraft light (at least in comparison to previous skeds) to allow for substiting due to maintenamce and mechanicals. Something unheard of here in the past!!

[boiler]

Trader,

I am not sure I understood you post. Do u mean to say that they will be keeping these 5 a/c as stand-by, or will the reduced fleet be flown less?

From what I heard, there may be a bigger problem with the new wave system proposed by the consultants. Half the connections are at 40 minutes. This seems to be a very tight schedule. The GF fleet is unreliable and cannot perform well enough to sustain such low connecting times.

[Icarus]

DesertM - No, I am not justifying anybody's salary; simply responding to Boilermakers request in respect of my math.

Boilermaker - "..you will easily see how SYD helps your network.." Yes! Losing BD1M p/a - not the sort of help I think we need right now. Cutting that route alone pays the CEO's salary - good start!

The 'wave' system is no different to that proposed and recommended by SH&E some 5 years or so ago - it is the only way forward now just as it was then; shame it was ignored at the time.

The only issues are Bahrain Airport and facilitating the transfer process effectively (passengers baggage) NOT the aircraft. Get that resolved and GF will succeed without a doubt.

[boiler]

Yes! Losing BD1M p/a - not the sort of help I think we need right now. Cutting that route alone pays the CEO's salary - good start!

I told you time and time again, you cannot base decisions on the leg p/l because of the revenue pro-ration that takes place. Hopeless. :ugh: Go take some IATA courses about networking. Maybe then you will understand.

[Trader]

From the presentation they made I understand that they will be lightening the sked to allow for approx. 5 aircraft to be offline, in maintenance or available to sub into a route. The idea being to start bring the fleet up to standard and being able to salvage the sked when an aircraft goes tech.

This would go hand in hand with 40 minutes connections etc.

[Icarus]

BM - not wanting to get into a slanging match with you over this, but I am well aware of the principles of pro-ration etc and am frankly not in need of any education on the matter.

Let's look at your basic statement:

"If SYD is giving 9M to all other routes (network benefit) it is feeding, then cancelling SYD will not mean u are saving the 10M. In fact, you will save only 1M. This is because while you are saving the 10M in cost, you are also losing the 9M revenue of the network benefit."

In very simple terms this means:

Operating E>F has costs of 10M. That route plus feeders (e.g. A>E B>E C>E etc) brings in 9M in revenue. NET RESULT = LOSS 1M

No question. No argument. Your words admit this same fact.."In fact, you will save only 1M.."

Now given that this may make A>E B>E C>E etc loss incurring routes due to the loss of (incremental/pro-rated whatever you want to call it) revenue by closing E>F is another question. If the answer is YES, that means they were already losing money PRIOR to E>F opening and should perhaps have had their operational & profit feasibility questioned in the first instance! Another wonder of the APM modules or its users! ("a fool with a tool is still a fool" - thank you REVMAN2)

There is no business sense whatsoever in operating a route that costs 10M when it only brings in a TOTAL network revenue benefit of 9M - unless, of course, your objective is to go bankrupt!

Now perhaps you should potter off and do what you do best; making central heating appliances I assume! :eek:

[boiler]

Now perhaps you should potter off and do what you do best; making central heating appliances I assume!
What can I say, u were wrong before and u are wrong again now. Just a few points for you to consider:

1) I never said that you should operate losing routes. All I am saying is that if you think you are going to save 10M because you quit SYD, you are sadly mistaken.

2) All routes are losing money. Should GF close all stations including DXB? While you are at it, close the whole bloody airline and all the other ones in the region. The fact is very few airlines in the gulf are making any money (QR, EY, etc...). The only difference is that the other airlines have much bigger support by people and governments with deeper pockets.

3) I will bet you anything that MCT-LON is losing tons of money more than SYD. After the bilaterals between India and the UK were updated, you have more and more airlines operating and offering direct services. As a result, the bread-and-butter traffic of GF to the ISC is now almost completely dry. Yet, GF is still operating it.

4) I think you might find that SYD only started to 'lose' big time when the fuel shot up to what it is now (from $0.90/gal to $2.20/gal). When GF started to operate this route, it was probably a very profitable route.

Now why don't you go take that IATA course, you still need that I see.

[Capt Hair Y Balls]

Chaps hate to say this but you're rambling on about the tree and neglecting the forest. The overall actions the new management is taking is indicative of preparation for other issues. I forcast they have been given a mandate to prepare the airline for partial privatization.

[bus787]

Seems some good news was given in the Pilots meeting with new COO.
Not much complains posted.
Whats the News guys?
Time to come Back??

[bird dog]

Or... Maybe... Everybody`s busy updating CVs...

[ironbutt57]

Guess you had to be there....:ok:

[REACH-69]

Heard the guy was full of c**b and bu****it ,same old story but this time it was in swiss version............see you on line at EY:ok:

[ironbutt57]

In his follow-up letter, the COO has promised to address the concerns raised and provide some further details on proposed amendments at the end of the month..I was under the impression these two meetings were to take the "pulse" of the pilot group...think he found it to be rather hypertensive to say the least..probably didnt help the atmosphere that EY was across the street booking pilot interviews, and actually offering jobs to 200+ cabin crew, and QR were conducting sim evals in our own facility around the same time...

Regarding benefits, and overall package at any airline here, does any carrier here offer a "cafeteria style" package...??

[wapses]

There is some concern at GF about too much reliance on consultants at present.

A classic example is the decisions on route cut-backs, frequency changes and the 01 July schedule. There are many positives in the new schedule, but I'm told that the consultants made their decisions without any discussions with the guys in the field.

Typical of consultants, I suppose.

[Trader]

Guys in the field?????? I hope you don't mean the pilots!!!! Losing $1 million US a day leaves few options. You have to cut the routes losing the most money regardless of potential, history etc. With losses like that cash flow is obviously negative and short of continued injections of cash from the country it is unsustainable.

But we are full on some of those routes!!! Ya, but the yield is nil to negative and thats what matters.

Consultants have a place - though I agree their value is limited in some areas.

Either way something had to be done and is being done.