Gulf Air believes it is on course with its ambitious turnaround programme, seven months in, although chief executive Samer Majali admits that many of the changes have been tough to implement.
The Bahrain-based carrier initiated a review of its entire operation last August, and detailed an overhaul strategy in November which - by adjusting the network, fleet and cost base - aimed to halt losses by 2012 and improve the quality of service offered.
Speaking in Berlin, Majali said the airline's losses were on track to be "far less" and that yields had improved compared with last year. Gulf Air hopes to cut losses by a third to one-half this year, and repeat this in 2011.He says the carrier has realigned its network to attract better third- and fourth-freedom traffic, steering away from the sixth-freedom market to get higher-quality revenue. It has opened new regional routes, including services to Iraq, and its latest links include the Saudi city of Medina and year-round operations to Aleppo and Alexandria.
 |
|---|
"We're aggressively attacking the cost elements that don't add value"Samer MajaliChief executive, Gulf Air |
But the drive to reshape Gulf Air into an efficient operation has proven difficult, admits Majali. He says the company has had to overcome its "pre-occupation for large aircraft on short flights" and accept the removal of a dedicated first-class cabin. It has withdrawn 10 aircraft, including several Airbus A340s, and introduced smaller types - among them a pair of Embraer 170s, an evaluation of which is being finalised ahead of plans to bring in two 190s during the third quarter. Sensitive discussions are continuing with Boeing and Airbus to rebalance long-haul orders in favour of smaller jets.
The airline has reconfigured its first-class and business-class cabins by combining them - putting full-fare business passengers into the first-class seats - and offering a single, high-quality on-board service. Majali says this benefits all of the premium passengers: the first-class customer obtains a lower fare, while full-fare business-class passengers gain a better seat, and those in discounted business-class are presented with better service.
Majali adds it has had to work to overcome motivational issues among staff, who have been faced with a "very unstable situation". But while Gulf Air has experienced a degree of resistance over the "radical" changes, including token protests a few months ago, Majali says there is a general acceptance regarding the need to attain a better business model.
"There's an overall sense that something serious had to be done," he states. Gulf Air has slashed its workforce by nearly 20% over the past year, bringing it down to 4,300, and avoided compulsory redundancies. Majali says, however, that there is probably room to take the headcount below 4,000.
"We're aggressively attacking the cost elements that don't add value," he adds. But the carrier is also looking to reverse some of the outsourcing which has taken place over the years, particularly in the engineering sector. While heavy maintenance would remain outside of the company, Majali says the carrier would like to bring back in-house some of the other routine line maintenance.
Gulf Air believes that enduring the painful restructuring will make it more attractive to the major alliances, and potential membership could be close. Majali says the airline groups have shown interest in the carrier and he expects a "clearer view" of the alliance strategy by the end of this year.
Source: Flight Daily News
