Gulf Air (Bahrain) has announced a new restructuring plan. The changes include a realignment of its network (it has already closed eight routes), a simplified fleet (it is unspecified which types will be retired) and a “right-sizing” (reduction) of the workforce.

The company issued the following statement:

Following the appointment of a new Board of Directors in November last year, led by H.E. Shaikh Khalid bin Abdulla Al Khalifa, Deputy Prime Minister, the Executive Restructuring Committee and the Gulf Air management have been working on a balanced restructuring strategy that will take the airline on a path towards sustainability and support the future economic development of Bahrain.

The strategy, which was announced today, aims at strengthening the national carrier’s core services by optimising its fleet and network, streamlining its organisational structure and re-engineering its internal processes to transform the airline into a more dynamic and efficient national carrier that will continue to serve the Kingdom of Bahrain and its customers.

Towards achieving this goal, certain decisive actions have to be taken in order to maintain the sustainability of the airline. The strategy aggressively addresses minimising losses and reinforcing the airline’s position as a key national infrastructure asset, while ensuring it remains to be the region’s most family and business friendly airline.

Announcing the details of the new strategy H.E. Shaikh Khalid bin Abdulla Al Khalifa, Deputy Prime Minister said, “Gulf Air is a key national infrastructure asset and provides business links which are important for wider economic development. In order to best position the airline for future growth and ensure it remains integral to the Kingdom’s evolving business requirements, the airline’s management, with the support of the Board of Directors, are committed to implementing a restructuring strategy to put Gulf Air on a path towards sustainability.”

“The restructuring and subsequent financial rehabilitation of Gulf Air will liberate treasury resources for domestic investment and result in a transformed national carrier,” he concluded.

Developed following careful review and analysis of key critical issues facing the airline, the Executive Restructuring Committee and the Gulf Air management have created a balanced restructuring strategy.

Strategy Outline:

A Re-Aligned Network to benefit customers

Gulf Air will strengthen its Middle East and North Africa (MENA) operations to ensure that its core customer base is served more effectively and efficiently while taking appropriate measures to reduce losses. Consequently, the airline has already closed eight commercially unviable routes. Gulf Air’s realigned network, will continue to operate to destinations in the Middle East, Europe, Far East and India  offering flexible and multiple flight options while maintaining strategic links with selected European, Far East and Indian subcontinent markets.

The realignment of the network will allow the airline to use its fleet and resources in the most efficient way in MENA markets by moving away from low-yield transit traffic and concentrating on high-demand and high-yield point-to-point routes to connect Bahraini businesses with regional markets.

The restructuring process will ensure that Gulf Air continues to hold a leadership position in the Middle East by operating the largest regional network. The airline, known for achieving the highest on-time performance in the region, will continue to maintain and improve its operational efficiency and reliability.

A Simplified, Modern fleet

Gulf Air will simplify its fleet to meet its revised network and flight schedule, operating a mix of wide and narrow body aircraft with one of the youngest fleets in the region (4.3 years). It will continue to offer its hallmark Arabian hospitality accompanied by its award winning customer service and leading on-time-performance reinforcing its position as the region’s most family and business friendly airline.

A Right-sized Workforce

All cost elements of the business will be rationalized. Gulf Air’s workforce requirement will be aligned to meet the operational, maintenance and administrative needs of the revised fleet and network. The introduction of a simplified structure will drive organizational efficiency, increase productivity and align accountabilities to the success of the organization

Right-sizing will be implemented across all levels of the organization and will be done on a performance-based review and individual job assessment against business-critical requirements. Priority will be on retaining the most productive employees with focus on maintaining key talent.

As the national carrier of the Kingdom of Bahrain, Gulf Air will continue to be a leading employer providing continuous learning and skills training opportunities to grow within the organization and work hard for Gulf Air’s long term success and future.

A Financially Stronger Airline

Gulf Air’s main objective in the restructuring process is to reduce its losses through various cost-cutting measures across its business functions while improving yield and increasing revenue.

Then plan will result in cost savings of 24% by the end of 2013. In addition, further strategic initiatives have been developed that will reduce costs and improve financial results in 2014 and beyond. Revenue per Available Seat Kilometre (ASK) will increase by 9% in 2013 through improved revenue management and sales, frequency adjustments and route cancellations. 

To ensure that the Government funding is utilised effectively supporting the long-term objectives of the Kingdom of Bahrain and the restructuring is on track and handled in a professional and transparent manner, The Board of Directors, led by H.E. Shaikh Khalid bin Abdulla Al Khalifa, Deputy Prime Minister is  committed to holding a full board meeting every month.  This is in line with the mandate of the Board as directed by the Government to oversee the execution of the restructuring plan across all areas of the organization.  

Gulf Air will continue to operate with high-standards of international corporate governance and is committed to transparency. Towards achieving this objective, an online mechanism has been set up at Gulf Air.com to report any malpractices, which will directly reach the Audit Committee and the Board of Directors for investigation and appropriate actions.  The airline is committed to keeping its stakeholders fully informed as each major milestone of this strategic programme is achieved.  

The three year transition program will leave Gulf Air in a stronger position to meet future challenges. It will create a dynamic, commercially sustainable business better positioned to meet its future challenges.

Copyright Photo: Paul Denton. Gulf Air is likely to stabilize around the A320/A321 for regional routes and the A330 for longer routes. Airbus A320-214 A9C-AB (msn 4030) arrives at neighboring Dubai.

Gulf Air: