Tuesday, August 25, 2009

DTN News: Gulf Air May Cut Plane Orders Amid Strategy Review

DTN News: Gulf Air May Cut Plane Orders Amid Strategy Review
*Source: DTN News / Int'l Media
(NSI News Source Info) DUBAI, United Arab Emirates - August 25, 2009: Gulf Air, Bahrain’s struggling national carrier, may review its aircraft orders from manufacturers Boeing and Airbus in the face of mounting losses, its new CEO said on Sunday.
Samer Majali, the airline’s fourth chief executive in three years, said the review could see changes to aircraft types and delivery schedules to bring them in line with the company’s requirements, part of a wider restructuring aimed at returning the airline to profitability. But there is no plan to cancel existing orders, Majali said, adding that the new planes have to match the airline’s route and capacity needs.
Gulf Air last year signed an agreement with Boeing for up to 24 787 Dreamliners in a deal valued at nearly $6 billion and ordered 35 single-aisle and wide-body Airbus aircraft worth around $5 billion.
"All of these contracts will be honoured. (But) we are going look at the fleet composition and the network we are going to come up with,” Majali told Maktoob Business in an interview.
“We will re-engage with the manufacturer to discuss our requirements," he said, adding that the contracts allowed for such adjustments.
Majali did not specify a timeframe for when Gulf Air plans to told talks with Boeing and Airbus.The delivery of Boeing planes is to start in 2016, while Airbus aircraft are scheduled to be delivered between 2009 and 2012.
The airline currently has a fleet of around 30 planes serving a network of 40 destinations.
UPHILL BATTLE
Majali succeeds Bjorn Naf, who resigned on July 2 amid criticism from Bahraini lawmakers who threatened yet another probe into corruption at the airline.
A former Royal Jordanian CEO, Majali is credited with transforming his previous company.
However he faces an uphill battle to turn around the fortunes of Gulf Air, which continues to haemorrhage cash, has witnessed countless management upheavals and is subject to constant scrutiny by Bahraini MPs.
The airline is still losing around $700,000 a day, according to a senior MP, despite major restructuring in 2007 that included destination, fleet and employee cutbacks.
Majali said he has held meetings with senior management to come up with a concrete plan to revive the airline.
"We will put a new strategy in place to compete effectively in the market and open new markets. The idea is to commercialise the airline as soon as possible," he said.
PROTECTING JOBS
Bahrain trade unions have said Gulf Air plans to axe around 270 jobs in the restructuring.
Asked if the restructuring will involve job losses, Majali said he will “try my best" to protect jobs.
"That is the policy moving ahead," he said.
The new chief executive earlier outlined his strategy to employees, telling them that "we cannot rely on government subsidy indefinitely so we also need to build a self-sufficient and commercially successful airline".
Established in 1950 as a pan-Gulf venture, Gulf Air was the region's first airline. But rather than dominating the region's aviation industry, the airline was overtaken as Gulf states such as the UAE and Qatar exited the venture to create their own national carriers.
Majali said he does not intend to try to emulate the growth of Emirates and Qatar Airways.He said the airline will focus on within two to three hours of flying time from Bahrain, widening its scope to destinations such as former Soviet republics in the future.
"We will grow selectively and rationally. We do not have resources as others around us. We are not going to mirror their growth," he said.
EDITOR'S NOTE: The story has been corrected to clarify that Gulf Air has not given a timeframe as to when it plans to hold talks with Boeing and Airbus over the review of its aircraft orders.

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