Gulf Air review to assess fleet needs and lessen subsidies

London
Source:
This story is sourced from Pro
See more Pro news »

Middle Eastern carrier Gulf Air is to examine its fleet-renewal commitments to Airbus and Boeing and evaluate the possibility of joining an alliance, as it bids to lessen its dependence on the Bahraini Government.

Gulf Air's new chief, Samer Majali, has stated that the carrier is "not sustainable" but cannot keep relying on subsidies from the kingdom.

In a speech to employees, Majali said he would undertake a "comprehensive review" of the airline's strategy - something which, he said, had not been implemented since the carrier became the Bahraini flag-carrier.

"We do not yet know what size or shape Gulf Air will take following this review," says Majali. "However, as a result it may be necessary for us to look at our fleet orders and adjust them accordingly to the airline's newly-defined requirements."

No details are yet available as to any potential change in Gulf Air's fleet agreements.

Gulf Air has 20 Airbus A330s and 24 Boeing 787s on order, as well as a batch of Airbus A320s. In April the airline said it would introduce 10 new A320s during the coming year.

"We are keeping an open mind and will look at all potential avenues to achieve a sustainable business," Majali says.

"This may include developing existing or building new alliance or strategic partnerships with other airlines."

Gulf Air has previously expressed interest in joining one of the major alliances, although it recently stated that this could take two to four years.

Majali has previous alliance experience, having overseen Royal Jordanian Airlines' integration into Oneworld.

In his speech Majali also said that Gulf Air could not rely on future financial aid from the Bahraini Government, which wholly-owns the airline.

"We cannot expect to continue to receive government financial support and subsidy indefinitely," he says. "Gulf Air is not sustainable and is losing public money.

"I have been here before. From my previous position at Royal Jordanian, I have extensive experience of turning a loss-making government-owned airline facing annual losses, rising competition and an unstable market, into a profitable business."

Majali also concedes there has been "considerable speculation" concerning any privatisation of Gulf Air, but declines to comment further.

Gulf Air's strategic review should generate a set of recommendations by the end of this year. The carrier says it will engage in discussions with "all key stakeholders".