Gulf Air cuts operating costs by 50%

By Victoria April 24, 2013 11:52

Gulf Air cuts operating costs by 50%

Gulf Air, Bahrain’s national carrier, has announced that during the first quarter of 2013, it reduced its overall losses by approximately 50% compared to the first quarter of 2012. This was realised principally through a 21% fall in year-on-year expenditure driven by reductions in aircraft leasing fees, flight-related charges and staff expenses in addition to the closure of loss-making routes.
The airline is currently three months into a restructuring strategy driven by Gulf Air’s Board of Directors, led by its Chairman H.E Shaikh Khalid bin Abdulla Al Khalifa, the Deputy Prime Minister, and implemented the airline’s management team.
Consistent with the restructuring plan that was presented to the Members of Parliament in November 2012, for the first quarter of 2013 the airline performed 11% better than forecast. “This positive variance was due in large part to a top-line revenue performance that better than planned, realised through network refinement and the aggressive implementation of a series of commercial initiatives,” stated the airline.
Gulf Air’s passenger yield was 21% higher compared to the first quarter of 2012. The increase coincides with the successful realignment of the airline’s network and fleet, a stronger traffic demand in the region and significantly higher sales in Bahrain.
Gulf Air Falcon Cargo freight recorded a 3% increase in revenue against first quarter plan.
The national carrier has completed its network realignment strengthening its Middle East and North Africa (MENA) operations while maintaining strategic links to select points in Europe, the Far East, India and Pakistan.
The airline also commented that it has been engaged in “exhaustive negotiations” with its lessors to return surplus aircraft and as a result Gulf Air now operates a mixed wide and narrow body all Airbus fleet consisting of 26 aircraft. The airline’s fleet is one of the youngest in the region with an average aircraft age of just 4.7 years.
“In spite of a turbulent three months characterised by jet-fuel costs of over $130 per barrel, the on-going economic concerns regarding the Eurozone debt problems and growing competition regionally, Gulf Air’s first quarter financial and operational results demonstrate the significant restructuring progress that the national carrier has made in improving productivity through the reduction of manpower, increasing revenue and reducing operational costs. Tough decisions taken over the past three months by the airline’s Board of Directors and its management team have started to yield positive results with the foundations firmly laid to put Gulf Air on a path towards long-term sustainability.”
The airline warns however that in the coming nine months of the year, the operating environment will continue to be challenging but that it is committed to continuing the implementation of the restructuring strategy.
“Through process and productivity improvements and procurement savings across the business, the national carrier will continue to reduce expenditure while transforming into a more dynamic and efficient airline. Gulf Air will continue to explore potential commercial opportunities across its existing route network. Recognizing additional capacity opportunities across the region the airline’s management team has initiated discussions with various Civil Aviation Authorities to request additional frequencies. Gulf Air will also continue to invest in upgrading its products. A retrofit of four A330 aircraft used primarily on London and Bangkok to introduce fully flatbed seats in Falcon Gold class, revamp Economy class and upgrade the in-flight entertainment system, is expected to be completed before the end of summer 2014.”

By Victoria April 24, 2013 11:52
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