Gulf Air is to shed its entire Airbus A340 and Boeing 767 fleets as part of a two-pronged restructuring, after disclosing the full extent of its financial crisis.

It is embarking on a 310 million Bahrain dinar ($822 million) investment programme to reverse heavy losses, which reached 130 million dinars last year. This will be driven by the Bahraini government, which is raising its share in the carrier to 80%.

New chief executive André Dose warns that job losses will be necessary to rescue the carrier, which is losing over $1 million a day. He says the situation is "more dramatic" than he had expected and describes the financial state as "critical".

Gulf Air has 34 aircraft - nine A340-300s, six A330-200s, 10 A320s and nine 767s - but will cut the fleet to 28 by eliminating the A340s and 767s. All-economy operation Gulf Traveller, which used five of the 767s, will be axed.

It will instead bring in another eight A330s as well as four A321s, the airline's first, to create a simpler all-Airbus operation. Dose says the replacement programme will be completed by the start of 2009.

He wants to close a "profitability gap" of 156 million dinars by restructuring 12 main business areas. This will cut costs by 66 million dinars and generate an extra 90 million dinars in revenues.

Gulf Air's revamp will involve improving Middle East connections and dropping loss-making long-haul routes to Hong Kong, Sydney, Singapore, Johannesburg, Jakarta and Dublin.

Source: Flight International