Gulf Air seeks to save R20 billion
November 24, 2009
Gulf Air has unveiled a plan to achieve one billion dinars (R20 billion) in savings over five years and make Bahrain's state-owned carrier a profitable business.
"At the moment Gulf Air currently relies on significant government support, spending far more than it earns. This is clearly unsustainable," chairman Talal al-Zain said.
"If we do not implement this programme, Gulf Air will continue to be an unacceptable burden on the national economy," Zain said.
Chief executive Samer al-Majali said Gulf Air is on course to post a loss of $193 million for 2009.
Gulf Air is "looking to significantly resize" the workforce and "some redundancies may be inevitable," he said.
The company said it will axe 15 routes and close operations at unprofitable locations including Shanghai, Hyderabad and Bangalore.
However, it plans to start serving 20 new destinations in the Middle East, Africa, Asia and Europe.
Gulf Air plans to adjust its fleet to focus on narrow-body aircraft and regional jets.
"The strategic plan will necessitate a substantial increase in our current requirement for narrow-body aircraft beyond the fifteen ordered (Airbus) A320s," the airline said.
It may sell five long-haul A340s and some other aircraft, as part of its "strategy to turn the company into a commercially sustainable business in 2012."
Gulf Air, which currently operates 36 aircraft, laid off 500 employees in January. Officials say it has run up total losses of more than $1 billion.
The company was founded in 1974 and Bahrain initially had three partners - Qatar, Abu Dhabi and Oman - but they have all dropped out. - I-Net Bridge
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