Gulf Air, once the Middle East’s
biggest carrier, reduced annual losses by half and reported its
best result in eight years after cutting jobs, retiring 14
planes and scrapping eight unprofitable routes.

Bahrain’s national airline cut the loss by more than 100
million dinars ($265 million) from a year earlier, a performance
that surpassed its restructuring target by 14.5 million dinar,
according to a statement today. It didn’t provide a breakdown of
the actual earnings for the year.

Under a turnaround plan introduced in December 2012, Gulf
Air cut annual costs 28 percent, with the workforce declining by
the same degree. Other measures including the renegotiation of
2,000 supplier deals. The carrier also introduced five new
destinations and boosted frequencies on eight existing routes,
helping to lift yields, a measure of pricing, by 14 percent.

“Gulf Air’s financial trajectory took a positive upswing
in 2013 following the successful implementation of a balanced
restructuring plan,” said Sheikh Khalid bin Abdalla Al Khalifa,
Bahrain’s deputy prime minister and the carrier’s chairman.
“Within one year and against the backdrop of a challenging
operational environment this is a significant achievement.”

Gulf Air has reined in losses after focusing more on local
point-to-point services, calling a halt to efforts to compete
with the Middle Eastern “big three” of Emirates, Qatar Airways
Ltd. and Etihad Airways in the long-haul transfer market.

Fleet Review

The carrier was forced to address its long-term viability
after the government told it to shrink operations or face
closure. Acting Chief Executive Officer Maher Salman Al Musallam
said in the statement that the requirement for treasury
resources has already been reduced.

Gulf Air pared an order for Boeing Co. (BA:US) 787 long-range jets
and switched a contract for Airbus SAS A330 wide-bodies to
smaller A320-series models. The existing fleet totals 26 planes
which had an average age of 5.7 years at the end of 2013,
approaching the lowest in the company’s 64-year history.

The carrier is adding flat-bed seats on existing A330
planes used mainly to London and Bangkok.

Gulf Air is studying new routes in the Mid-East, North
Africa, Eastern Europe and Asia, as well as code-share options,
and is open to joining an alliance, according to the statement.

To contact the reporter on this story:
Christopher Jasper in London at
cjasper@bloomberg.net

To contact the editors responsible for this story:
Benedikt Kammel at
bkammel@bloomberg.net