BAHRAIN’S loss-making national flag carrier has announced a raft of changes to its routes, fleet and staffing levels in a bid to avoid the multi-billion-dollar losses it is projected to make in the coming years.
At the end of a three-month structural review Talal Al Zain, Gulf Air chairman and chief executive of the airline’s owning company, Mumtalakat, the investment company for the Kingdom of Bahrain, joined chief executive Samar Majali to meet employees and the press to outline their recovery plans.
Majali said one of the major causes of the airline’s financial woes is that no proper business strategy was put in place when it went from being financed by four countries to being reliant solely on Bahrain and its former partners established their own competitor operations.
He said five options had been considered from maintaining the status quo, with a projected loss of $2.65 billion over the next five years, to operating a simplified fleet which is projected to make the airline profitable by 2012.
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Al Zain ... key strategy |
In essence, Majali said the strategy for recovery would mean adjusting both fleet and network.
He announced the suspension 15 unprofitable routes, including Shanghai, Hyderabad and Bangalore, and the closure of overseas stations but at the same time said Gulf Air would look to increase its operations on more profitable routes, such as the three Iraqi destinations it recently launched and also cities in Europe.
In doing so its focus will shift to narrow-bodied aircraft and regional jets, both of which carry fewer passengers, have lower operating costs and are less likely to require ticket-cost reductions to fill.
Some wide-bodied aircraft will still be in operation on busy existing routes, such as some of those in the Far East, but this is expected to reduce drastically over the coming years.
He said the success of the recovery strategy would depend on adjustment of the fleet and routes to match passenger volumes and demand, bringing the size of the workforce into line with industry norms, streamlining internal processes to improve efficiency and adopting a “performance-based culture based on efficiency and diligence”.
When quizzed about future staffing levels he would not give a definitive number – Gulf Air currently operates at around 180 staff per aeroplane compared with some budget carriers which have a third of that number.
But he did say Gulf Air will not lose a single ‘good’ employee regardless of nationality and later stressed the emphasis on ‘good’, meaning an employee who is productive and wants to give 100 per cent to make the new strategy work.
On this point Al Zain added: “To retain an unproductive employee would be fraudulent, we want people who are going to work with us.”
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Gulf Air ... new focus |
On the issue of planes already on order Majali refused to be drawn on cancellations for existing wide-bodied aircraft, which will have a much lesser role in the new network, but said his team is working with suppliers to reach agreements since there is likely to be an increased need for narrow-bodied planes such as the A319/320 and A321, which are already in use, successfully, by airlines, including Lufthansa, on the European routes out of Bahrain.
In summary Majali said he expects the new strategy to bring Gulf Air into the black by 2012 but added that it will be hard work with tough decisions still to be made along the way.
And adressing colleagues he said: “A strategy is no good without people to implement it and the best people to do this are you, our employees and colleagues. While we face some tough decisions as we continue to develop and implement this outline strategy, you need to understand and appreciate the challenges we face and help drive the changes that are needed to turn this airline around.
“As our chairman has clearly stated, this is our last chance to do this. We will only be able to do it if we work to deliver this future vision together.”
by Liz O’Reilly