Gulf Air is slashing aircraft, routes and jobs in a drastic restructuring that will also see Bahrain's government increase its stake from 50% to 80%.
New chief executive Andre Dosé unveiled plans to rebuild Gulf Air in early April. Dosé revealed the carrier was losing over $1 million per day and had a "profitability gap" of 156 million dinar ($414 million).
To close this gap and return the carrier to profitability, Dosé has initiated a two-part restructuring that will cost 310 million dinar. In the first part, services will be axed to Hong Kong, Sydney, Singapore, Johannesburg, Jakarta and Dublin and the all-economy Gulf Traveller unit will be shut. But Dosé says frequencies will be increased to "key destinations" and connections to cities within the Middle East region will improve.
Gulf Air will also reduce its fleet from 34 to 28 aircraft. It has not yet indicated how many of its 6,000 jobs will be cut.
All the cuts should drive a 66 million dinar reduction in costs and generate an extra 90 million dinar in annual revenues. "We have ambitious plans for Gulf Air, but these will not be realised if we only make cosmetic changes to the way we do business," says Dosé.
In the second part of the restructuring, Gulf Air will invest 190 million dinar to improve its product, including refurbishing cabins. The Bahrain and Oman governments now each own 50% stakes in Gulf Air, but the Bahrain government will pay the bulk of the restructuring costs. In exchange, its stake will increase to 80%.
Source: Airline Business
