The latest restructuring programme at Gulf Air delivered cost savings of 25.5 million dinar ($67.6 million) in 2011, the Bahraini flag carrier has said, mounting an apparent rebuttal to parliamentarians who blocked its bailout package earlier this year.
Gulf Air is believed to have lost around 190 million dinar in 2011, after the Arab Spring prompted a 25% slump in bookings for the first five months of the year.
Bahrain's parliament subsequently voted against a 664-million dinar bailout plan for the airline, criticising the turnaround strategy adopted by chief executive Samer Majali. The country's upper house, the Shura Council, is now considering the proposals.
Deflecting the political headwinds, Gulf Air says its three-year recovery plan was at least partly effective as it curtailed losses caused by the “regional geo-political situation”.
The flag carrier says it cut costs by 12% against revenues of 405 million dinar, delivering 25.5 million dinar in savings. The arrival of new A320s trimmed fuel costs by 1.4 million dinar, it says, while in-sourcing fleet management services saved an estimated 5.4 million dinar.
"While we are pleased with what we have achieved so far, we have set a definitive action plan for 2012 to achieve a further 15% reduction on our cost base this year," Majali notes.
"We used this difficult period as an opportunity to focus internally [on] reviewing our functions, such as operations, services, products, fleet maintenance, fuel savings, contract negotiations and manpower optimisation," he explains. "We applied tighter control over expenditure and implemented cost-control measures, higher asset productivity and more streamlined processes."
Bahraini sovereign wealth fund Mumtalakat, which owns Gulf Air, recently announced full-year consolidated net losses of 271 million dinar - compared with 234 million dinar in 2010.
The fund admitted that Gulf Air had weighed heavily on its performance, but it credited the flag carrier with undertaking "several restructuring initiatives ... to reduce operating losses, achieve cost efficiencies and improve the quality of product offering".
Gulf Air has for several years sought to re-invent itself as a regional operator, having lost market share to the new breed of Gulf mega-hubs in Qatar and the United Arab Emirates.