Gulf Air announces 'realignment' to regional focus

Gulf Air plans to add regional aircraft and more A320s while downsizing its widebody fleet, including selling its five A340s, as part of a three-year "realignment program" aimed at making the unprofitable carrier a "commercially sustainable business" by 2012, it announced yesterday.

The new strategy will see Bahrain's national airline suspend up to 15 loss-making routes, including Shanghai, Hyderabad and Bangalore, but expand its operations into more than 20 new destinations as it implements a network with a stronger regional focus. "For the first time, Gulf Air will focus specifically on Bahrain, serving the kingdom with higher frequency, nonstop services to more destinations across three continents," CEO Samer Majali said. "We will also provide better services to some of the world's leading financial markets, helping to support Bahrain's significant financial services sector."

He noted that the new strategic plan will "necessitate a substantial increase" in the carrier's narrowbody fleet beyond the 15 A320s ordered in May 2008 "whilst reducing our requirement for widebody aircraft." It has an order with Boeing for 24 787s and with Airbus for 20 A330s.

"We are engaging our aircraft manufacturing partners in order to align our current order book with our new strategy," Majali stated. "Meanwhile, we are exploring the possibility of selling five of our A340s and the disposal of certain other aircraft that have become surplus to requirements." The airline also is considering introduction of "regional jet aircraft as early as next year," he confirmed to reporters without revealing which type it is eyeing.

Chairman Talal Al Zain, who is also CEO of Mumtalakat, the Bahraini sovereign-wealth fund that owns Gulf Air, acknowledged that currently the carrier relies on "significant government support, spending far more than it earns. This is clearly unsustainable." He estimated that the restructuring plan, which will include an unspecified number of job cuts, will save the Bahrain government up to BHD1 billion ($2.65 billion) in direct support over the next five years. Gulf is expected to post an operating loss of BHD193 million this year.

Majali, formerly CEO of Royal Jordanian, became Gulf's fourth top executive since 2002 in August and immediately began a comprehensive review of the carrier's fleet and route structure (ATWOnline, Aug. 25). It currently operates 36 aircraft on a network spanning 43 destinations.