Oman Air 'on track' despite soaring losses

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Oman Air has posted a mixed bag of operational result for the full year to 31 December 2011, with losses surging 41% to 110 million rial ($285 million) despite the Gulf carrier recording significant improvements to its revenue, load factors and traffic.

Year-on-year losses would have declined were it not for the impact of fuel prices, which increased the airline's expenditure by 37 million rial, says chairman Darwish bin Ismail bin Ali Al Balushi.

Labour costs also hit the bottom line, with salaries rising 10% to 87.3 million rials. Higher wages reflected nationwide efforts by the government to raise living standards in response to low-level civil unrest last year, when the Arab Spring took hold across the region.

Beyond its higher cost-base, Oman Air achieved several operational targets over the year. Revenue rose 35% as the number of passengers spiked 16% to 3.8 million, while load factors also rose by 0.5 percentage points to 72.7%.

The flag carrier pressed ahead with its cautious expansion programme in 2011, increasing capacity but shifting its focus onto under-served regional connections and selected long-haul markets like London Heathrow airport. To this end, the arrival of two short-haul Embraer 175s and a codeshare agreement with British regional carrier bmi supported growth.

Oman Air also gained a new chief executive following the retirement of Peter Hill, who had joined the company in 2008. Incoming CEO Wayne Pearce will continue to style the airline as a luxury carrier, working closely with the Omani tourism authorities.

"Our branding strategy is fuelled by our total commitment to offering passengers the very best in 21st century air travel," Al Balushi says in the annual financial report. "In June, Oman Air's A330 business class seat was named as the best in the world by Skytrax ... who also designated Oman Air as an official four-star airline."

The airline is due to receive the first of six Boeing 787 Dreamliners in 2016. It has outstanding orders for another two E-175s and six 737-800s, according to Flightglobal's ACAS database.