Manama: Bahrain’s state-owned carrier Gulf Air has announced a restructuring plan intended to stem losses of more than $1m a day and to lead to a return it to profitability by 2012. The struggling carrier plans to shift its order book from wide-body to narrow-body planes and regional jets as it realigns its network to focus on shorter routes, its chief executive said.
Gulf Air has up to 20 Boeing 787s on order, as well as 15 Airbus A320s and 20 Airbus A330s, a wide-body aircraft. Gulf Air CEO Samer Majali, who joined three months ago to restructure the loss-making firm, said on Monday the airline will cancel 15 routes and open 20 new ones as part of a new strategy to increase traffic in the Middle East. He declined to say how many of the Boeing planes on order Gulf Air could use under its new strategy.
"We are talking with the manufacturers of the airplanes to see how we can satisfy the plan with the requirements of the contracts we have," he told a media conference in Manama. "This is exactly what we're going to be discussing with Airbus in particular, in view of the fact that we're also going to expand our narrow-body order beyond the 15 that we already contracted for.”
Gulf Air also plans to sell five of its A340 aircraft as it plans to close its routes to Shanghai, Hyderabad and Bangalore. Following a three-month review, the government has approved a plan to scrap loss-making long-haul routes and concentrate on direct flights from Bahrain to other Middle East destinations. About 80 per cent of Gulf Air’s business currently comes from transit passengers, who typically pay less than those on direct routes.
“We have two choices for Gulf Air – either we close down this company, or we turn it around. There was no third choice,” said Talal Al Zain, chief executive of Mumtalakat, a government holding company which owns Gulf Air.
The company is in talks with both suppliers “to see how we can reach a common ground on our current order book”, said Majali. Job losses could also be expected at Gulf Air, he said, but as yet no targets had been decided.
