Gulf Air is to turn its attention to privatisation after succeeding in returning itself to profit during 2004. The Middle East airline is meanwhile considering adding freighters to its fleet.
Gulf Air achieved a small net profit of 1.5 million Bahrain dinars ($4 million) in 2004 – it had set its sights on breaking even – compared with losses of 20 million Bahrain dinars in the previous year. Chief executive James Hogan says privatisation to raise capital is the "next step" and will be on the agenda at a board meeting in May.
"The financial community is certainly interested and we're in discussion with a number of banks," he says. "We have proved our credentials not only in corporate transparency and strict financial discipline, but also in honouring our [turnaround] commitment to our shareholding owner states.
"Moving forward, and on the back of these results, there is a strong argument for privatisation. This will generate the kind of capital we need to re-equip the airline to compete effectively."
Hogan adds that Gulf Air's three shareholder states – Bahrain, Abu Dhabi and Oman – are all "supportive" of privatisation.
Gulf Air's move into profit, he says, means that the carrier has outperformed the target set under its three-year turnaround initiative Project Falcon.
The airline saw premium passenger numbers increase by 24% last year, but Hogan warns that fuel and competition remain concerns for the carrier. "We will have to manage the record fuel prices which, if unaddressed, have the potential to erode the progress we have made to date," says Hogan.
Gulf Air believes there is room for the addition of dedicated freighters to its aircraft fleet, and is looking at unspecified aircraft types. Cargo revenues for 2004 rose by more than 20% to 53.3 million Bahrain dinars.
DAVID KAMINSKI-MORROW/LONDON
Source: Flight International
