Gulf Air edged back into profit during 1997 after a cost-cutting campaign overcame two years of financial crisis.
The carrier's troubles began to unfold in 1995, when it recorded operating losses of $135 million, running up another deficit of $58 million in 1996. Ahmed Bin Saif Al Nehyan, brought in as president to stem the losses, says that last year the airline saw a small profit of $8 million on operations.
The turnaround follows a two-year cost-cutting programme under which 11 unprofitable routes have been closed, staff numbers have been reduced through early retirement and a reorganisation of the fleet has shrunk aircraft numbers to 28, from 36.
The airline was also forced to seek fresh capital from its four state shareholders within the United Arab Emirates: Abu Dhabi, Bahrain, Oman and Qatar. This finally went through last year after protracted wrangling.
Al Nehyan says that despite the 15% cut in seat capacity, traffic figures held up well in 1997, coming in at 4.9 million passengers, compared with around 5 million in each of the previous couple of years.
The airline began stripping out unwanted capacity from its fleet two years ago, including the lease of four of its five Airbus A340s. One A340 was finally sold last year, as were seven Boeing 767s.
Two of its 13 Airbus A320s were refinanced on a sale and leaseback deal last year. Gulf raised a further $195 million from a similar deal on another six of the aircraft with Abu Dhabi-based Oasis International Leasing this year.
In 1997 the airline posted a net profit of $48 million, turning around a net loss of $87 million the year before.
Source: Flight International