Gulf Air progresses with restructuring

Feb 28 2013

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Gulf Air

Bahrain’s national carrier
Gulf Air
, which announced a restructuring strategy last December, spearheaded jointly by the airline’s Board of Directors led by its Chairman Sheikh Khalid bin Abdulla Al Khalifa, the Deputy Prime Minister and the airline’s management, recorded restructuring progress within a month of its ongoing implementation. Despite a difficult operating environment, the restructuring measures have started yielding results and the strategy remains on track to achieve overall cost savings of 24 percent by the end of 2013.

In January 2013, through the implementation of prudent cost saving measures and an aggressive efficiency drive the airline reduced its overall losses by over 34 percent compared to Jan. 12, posted 9.6 percent increase in passenger revenue against its budgeted revenue and, increased its yields by over 8 percent.

The airline also cut its expenditure significantly through reductions in aircraft lease fees, flight related charges, staff expenses and the closure of four loss-making routes.

Based on the current progress and the estimated forecasts, the restructuring plan is on track to achieve its cost savings target by the end of 2013. Indications are also strong that the Revenue per Available Seat Kilometer (RSK) will achieve the targeted 9 percent increase in 2013 through the establishment of robust performance frameworks designed to deliver greater efficiencies.

The realignment of the airline’s network to strengthen its Middle East and North Africa (MENA) operations progressed as planned in January with the closure of four loss making destinations. The airline remains on course to deliver on its strategic goals of effective fleet and resource utilization supporting the Kingdom of Bahrain and its customers. With a focus on high-demand and high-yield point-to-point routes to connect Bahraini businesses with regional markets as opposed to low-yield transit traffic,
Gulf Air
continues to differentiate itself from its regional competitors and carve a long-term niche in a highly competitive business environment. The airline continues to hold a leadership position in the Middle East by operating one of the largest regional networks.

Gulf Air
is expecting to complete its network realignment by March 2013. It will continue to strengthen its regional markets offering flexible and multiple flight options while providing strategic links to selected European, Far East and India markets.

The groundwork has been begun to simplify and align the airline’s fleet with its revised network requirements. Successful negotiations were concluded in January to return two leased regional Embraer E90 jets. Further negotiations are on-going to complete the fleet realignment by April 2013. The airline now operates an all Airbus fleet.

The finalized fleet of 26 aircraft with a mix of wide and narrow body aircraft will be optimally utilized to serve the airline’s new network. Using predominantly new planes with high specification on-board products,
Gulf Air
will operate one of the youngest fleets in the region with an average age of just 4.3 years.

As part of the restructuring plan all cost elements of the business are being rationalized to meet the operational, maintenance and administrative needs of the revised fleet and network including manpower.

© The Saudi Gazette 2013

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