An aggressive restructuring strategy launched in December 2012 has enabled Gulf Air to halve its losses and report its strongest financial results in eight years, said a report in the Gulf Daily News (GDN), our sister publication.

 

The scheme included a 27.2 per cent reduction in manpower last year with 1,024 employees leaving the airline.

 

Expatriate employees made up 60 per cent of those made redundant and of the 429 Bahrainis who left the airline, 381 opted for a voluntary retirement scheme.

 

This means the airline has 2,742 employees on its payroll as of December 31 last year.

 

"With 65 per cent of the total workforce being Bahraini - the highest level in history - Gulf Air continues to be a key employer committed to developing a national workforce of aviation professionals," said Deputy Prime Minister and Gulf Air board chairman Shaikh Khalid bin Abdulla Al Khalifa.

 

"The restructuring has put the national carrier on track towards long-term commercial sustainability."

 

He was speaking yesterday during a media roundtable at the airline's headquarters in Muharraq, which was attended by other board members including Finance Minister and the Minister in Charge of the Oil and Gas Affairs Shaikh Ahmed bin Mohammed Al Khalifa, Political and Economic Adviser to His Royal Highness the Crown Prince's Court Shaikh Mohammed bin Essa Al Khalifa, Transportation Minister and Economic Development Board (EDB) acting chief executive Kamal Ahmed, Works Minister Essam Khalaf and Bahrain Mumtalakat Holding Company chief executive Mahmood Al Kooheji along with airline acting chief executive Maher Al Musallam.

 

From January to December last year, the airline's losses were cut by more than BD100 million ($263.7 million) or 52.4 per cent - from BD195.8 million to BD93.3 million.

 

"We have netted year-on-year cost savings of 28 per cent and 14 per cent passenger yield increase," added Shaikh Khalid.

 

"It is a significant achievement within one year and, against the backdrop of a challenging operational environment, characterised by high fuel costs, excess capacity and economic uncertainty."

 

The loss reduction was achieved through cuts in aircraft leasing fees, retiring of aircraft, closure of eight loss-making routes, opening of five new destinations, increasing frequencies to eight existing destinations, reduction in staff expenses, renegotiation of more than 2,000 supplier contracts and productivity improvements.

 

This year the airline is targeting a further 12 per cent reduction in losses.

 

Ahmed, who is also restructuring committee chairman, said a solid top-line performance enabled Gulf Air to exceed the restructuring target by BD14.5 million.

 

"Public support for the airline has been increasing, sales are rising, confidence in the airline is building, national pride in the carrier is being restored and there is a new energy and drive internally at Gulf Air," he said.

 

"The gains suggest that there will be no need for more downsizing."

 

He said the airline now had a clear vision of its future cost structure, continued to differentiate itself from regional competitors and had carved a long-term niche in a highly competitive environment.

 

"A number of new destinations are being studied across the Middle East and North Africa (Mena), Eastern Europe and Asia," he explained.

 

"Furthermore, the airline is also considering a number of potential codeshare opportunities and is open to joining an alliance that will provide additional global connectivity to Bahrain."

 

He said the network realignment enabled the airline to strengthen its Mena operations while maintaining links to select points in Europe, the Far East, India and Pakistan.

 

"A year on, Gulf Air is significantly stronger and financial rehabilitation has already reduced the requirement for treasury resources," he added.

 

He also said a new holding company that is being created will consolidate the national aviation assets under one umbrella and generate operational synergies.

 

"Profit making entities like Bahrain Airport Company and Gulf Aviation Academy will support Gulf Air's future growth," he said. - TradeArabia News Service