Bahrain and Oman, now joint owners of Gulf Air following the withdrawal of Abu Dhabi, have agreed a strategic plan designed to secure extra investment and allow the carrier to grow.
The main elements of the “Smart Business, Successful Business” plan include the recapitalisation of the airline, re-equipment of the fleet, product upgrades and refurbishment of present aircraft, and investment in a range of areas across the operation. Gulf Air chief executive James Hogan is pleased with the support shown by the new board for the new business plan. “With the support of shareholders that are 100% committed to the success of our business,” he says, “this airline will reinforce its position as a world class service brand with the strongest regional network in the Middle East.”
Gulf Air has been forced into drastic action after losing its richest shareholder at the end of 2005, making recapitalisation a priority. Although the agreement is still subject to final sign-off by each government and no figures have been released, Hogan says this now means Gulf Air can invest in new aircraft and other infrastructure, but reiterates that every decision will be made on a “sound commercial basis”.
A $75 million syndicated loan has been secured in the meantime, which will enable it to begin its near-term development. An agreement for the three-year loan has been signed with a consortium of lenders headed by Commercial Bank of Qatar, National Bank of Oman, Persia International Bank and the Arab Investment Company. Gulf Air plans to replace its nine Boeing 767-300ERs, most of which are operated by its all-economy Gulf Traveller operation, as a way of simplifying the fleet, also including Airbus A320s, A330s and A340s.
Another key part of the plan is the development of a two-hub strategy, now that Abu Dhabi has largely been taken over by Etihad Airways. The loss of traffic at Abu Dhabi as a result of cutting capacity is evident from figures released by the airline, which showed that passenger numbers fell by almost 17% to 2.7 million, while those at Bahrain rose by nearly 8% to 3.6 million, and those at Muscat by more than 15% to 1.8 million. Traffic overall remained static.
“The new two-hub strategy will result in significant cost reductions and bring major improvements to our key operational indicators, including punctuality as we will have greater flexibility and an even more effective set of connections,” says Hogan. But he insists that this does not mean a total withdrawal from Abu Dhabi, adding “we will still retain more than 50 flights a week into and out of Abu Dhabi, with direct and onward connections to a wide range of destinations”. ■
GUNTER ENDRES / LONDON
Source: Airline Business
