Gulf Air restructuring to concentrate on regional operations

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Middle Eastern carrier Gulf Air is to focus on regional operations, build up its short-haul fleet, and realign its network towards strong connections through Bahrain under three-year restructuring programme.

The Bahrain-based airline has outlined the three-point business plan today as it bids to achieve commercial sustainability in 2012.

Gulf Air has disclosed a need for a "substantial" increase in its narrowbody aircraft fleet, beyond the 15 Airbus A320s recently ordered, but a reduction in widebody types.

It has also revealed that it is looking at introducing regional jets as early as next year.

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 © Gulf Air

The carrier has 24 Boeing 787s and 20 Airbus A330s on order. "We are engaging our aircraft manufacturing partners in order to align our current order book with our new strategy," it says.

Gulf Air indicates that it will sell five Airbus A340s and dispose of "certain other aircraft" that it no longer needs.

To refine its network the airline will cut up to 15 routes - among them Shanghai, Hyderabad and Bangalore - in favour of expanding into more than 20 new destinations, to reinforce Bahrain's position as a connecting hub.

Gulf Air also aims to introduce new on-board products, seat arrangements and in-flight entertainment in a bid to offer a superior product to passengers.

Chairman Talal Al Zain says the state-owned carrier has a "clear mandate" to become viable and efficient, adding that it will involve "maximising investment into areas of the business that will offer the best returns while reducing cost in those that don't".

"At the moment Gulf Air currently relies on significant Government support, spending far more than it earns," he adds. "This is clearly unsustainable."

Gulf Air chief Samer Majali says: "For the first time Gulf Air will focus specifically on Bahrain, serving the kingdom with higher frequency, non-stop services to more destinations across three continents."

The transition will be undertaken in two phases: the realignment of the network over the next six to 12 months, followed by growth into new markets and product development in the second and third years.

Majali admits that the plans involve a "significant resizing" of the workforce, and warns: "Some redundancies may be inevitable, in which case we will aim to redeploy individuals elsewhere within the company."

Gulf Air believes the changes will save the Bahraini Government up to BD1 billion ($2.65 billion) in support over the next five years. Al Zain says that, without this programme, the airline will "continue to be an unacceptable burden on the national economy".