Gulf Air chief executive James Hogan has warned that the airline will not be profitable before 2006. Hogan, who took the helm of the troubled airline in May, has formulated a three-year restructuring plan. Although he is keeping the details close to his chest until the plan is approved by Gulf Air's owners - the governments of Abu Dhabi, Bahrain and Oman - Hogan says that the airline's finances "will take two years to rectify and in year three [2005] we'll break even".
The parent governments have already injected $82 million in short-term funding and may be asked for more to pay for the restructuring and keep the airline afloat until it starts to make a profit (Flight International, 4-10 June). But Hogan says the plan will focus on increasing frequencies to existing destinations in Europe, improving yield management and aircraft utilisation, and reducing costs by renegotiating supplier contracts, including the existing lease finance deals on the airline's fleet of 12 Airbus A320s, six A330-200s, five A340-300s and nine Boeing 767-300ERs. He also hopes to increase the airline's share of the leisure market by launching the "Arabian Experience" holiday package to Gulf destinations in association with online travel agent Lastminute.com.
The carrier will keep its three Gulf hubs in Abu Dhabi, Bahrain and Muscat. While saying "we will run this airline commercially...the key is how we can utilise the network best", Hogan acknowledges that the closure of any of the three bases would not be welcome:" The reality is we have three owning states that are our investors."
Source: Flight International
