Gulf Air Begins Restructuring Process to Reduce Losses
Tuesday, 15 January 2013
Sh. Khalid Bin Abdullah
Manama, Bahrain, following the appointment of a new board of directors in November last year, led by H.E. Shaikh Khalid bin Abdulla Al Khalifa, Deputy Prime Minister, the executive restructuring committee and the Gulf Air management have been working on a balanced restructuring strategy.

The strategy, which was announced today, aims at strengthening the national carrier’s core services by optimising its fleet and network, streamlining its organisational structure and re-engineering its internal processes to transform the airline.

Towards achieving this goal, certain decisive actions have to be taken in order to maintain the sustainability of the airline. The strategy aggressively addresses minimising losses and reinforcing the airline’s position as a key national infrastructure asset.

Announcing the details of the new strategy H.E. Shaikh Khalid bin Abdulla Al Khalifa, Deputy Prime Minister said, “Gulf Air is a key national infrastructure asset and provides business links which are important for wider economic development. In order to best position the airline for future growth and ensure it remains integral to the Kingdom’s evolving business requirements, the airline’s management, with the support of the Board of Directors, are committed to implementing a restructuring strategy to put Gulf Air on a path towards sustainability.”

“The restructuring and subsequent financial rehabilitation of Gulf Air will liberate treasury resources for domestic investment and result in a transformed national carrier,” he concluded.

Strategy Outline:

A Re-Aligned Network to benefit customers
Gulf Air will strengthen its Middle East and North Africa (MENA) operations while taking appropriate measures to reduce losses. Consequently, the airline has already closed eight commercially unviable routes. Gulf Air’s realigned network, will continue to operate to destinations in the Middle East, Europe, Far East and India while maintaining strategic links with selected European, Far East and Indian subcontinent markets.

The realignment of the network will allow the airline to use its fleet and resources in MENA markets by moving away from low-yield transit traffic and concentrating on high-demand and high-yield point-to-point routes to connect Bahraini businesses with regional markets.

A Simplified, Modern fleet
Gulf Air will simplify its fleet to meet its revised network and flight schedule, operating a mix of wide and narrow body aircraft with one of the youngest fleets in the region (4.3 years).

A Right-sized Workforce
All cost elements of the business will be rationalized. Gulf Air’s workforce requirement will be aligned to meet the operational, maintenance and administrative needs of the revised fleet and network.

Right-sizing will be implemented across all levels of the organization and will be done on a performance-based review and individual job assessment against business-critical requirements. Priority will be on retaining the most productive employees with focus on maintaining key talent.

A Financially Stronger Airline

Gulf Air’s main objective in the restructuring process is to reduce its losses through various cost-cutting measures across its business functions while improving yield and increasing revenue.

Then plan will result in cost savings of 24% by the end of 2013. In addition, further strategic initiatives have been developed that will reduce costs and improve financial results in 2014 and beyond. Revenue per Available Seat Kilometre (ASK) will increase by 9% in 2013 through improved revenue management and sales, frequency adjustments and route cancellations. 

To ensure that the Government funding is utilised effectively supporting the long-term objectives of the Kingdom of Bahrain and the restructuring is on track, the board of directors, led by H.E. Shaikh Khalid bin Abdulla Al Khalifa, Deputy Prime Minister is committed to holding a full board meeting every month. 

An online mechanism has been set up at Gulf to report any malpractices, which will directly reach the Audit Committee and the board of directors for investigation and appropriate actions.  The airline is committed to keeping its stakeholders fully informed as each major milestone of this strategic programme is achieved.