The Björn ultimatum

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Gulf Air’s recovery has been slowed by a change in management, last year’s record fuel prices and the worse industry outlook seen in decades.

"It's doable here because we have an airport with short travel distances," Näf says. "We don't have to be the biggest and the most beautiful airline, but if we deliver on the basics such as friendliness, punctuality, reliability and selling time as a unique selling point, then we'll be getting there."

It's unclear whether these additional changes will appease local MPs, but Näf certainly has his work cut out to convince the government of Gulf Air's ‘Bahrainisation' credentials - some politicians claim the airline has too many international workers in senior positions and not enough locals.

"There are many expatriate employees being hired, while qualified Bahrainis are not being utilised," argued FEAC vice-chairman Abdulhaleem Murad earlier this year. "The airline has not yet come up with a clear policy to Bahrainise jobs."

Just last month, Murad repeated his accusation, adding that "suspicious employees are being appointed by the president and chief executive Mr Björn Näf".

Näf vehemently denies the accusation, insisting the airline has taken big steps to introduce local talent. Of the airline's 35 directors, Näf estimates 60 percent are Bahraini, including deputy CEO Ismail Karimi and chief technical director Jasim Marzooqi. He adds that the airline has launched several recruitment initiatives and implemented training programmes for existing Bahraini staff.

"It's not just about placing a Bahraini in a leadership position - you have to give them the skills and continually develop them," he says. "We have hired people, but there is a long training programme to upgrade their skills and make them competent in that position."

According to Näf, the CEO faced similar criticism prior to joining Gulf Air. In 2003, he was boss of Swiss International Airlines' regional operation Swiss Express. Both entities were supported by government cash, and so a hot topic for local politicians.

"Parliament debated the progress of the company, so I understand the concerns of the [Swiss and Bahraini] public," Näf says.

Despite suffering at the hands of the Bahraini parliament, Näf is keen to establish better relations with local MPs. He does, however, urge them to accept that a full Gulf Air recovery will not happen overnight.

"We always said we need three to five years until you see a difference in fleet, product, customer perception and financial change," he says. "You would need maybe two or three years in an environment where you are not hit with fuel prices of $147 like we were last year, which has eaten up a lot of our cost-saving initiatives.

"The second year of our realignment is during an economic slowdown if not a recession," he continues. "We are flying into many regions that have been hit and demand is just coming back. It's a very challenging time in 2009 to financially progress as far as we would like to."

Näf adds: "You cannot expect huge changes after a few years when the airline industry is going through the worst time ever. Every other business has the same thing; you cannot expect a change in CEO, the board or management and one year later have profits - not when fuel prices were $147 in 2008 or when the global economy goes into recession.

"We need stability to ensure we can finish what we have started," he says. "As the CEO, I am accountable for the performance and we need time. After three or four years you can better judge, with no emotions and on facts rather than hearsay."

Having called for more time, Näf knows he will still be judged harshly if Gulf Air fails to break even in 2010. With that in mind, he compares putting the airline on a sound financial footing to training pilots of the Red Arrows synchronised aerobatic team.

"You train every pilot making them effective and professional before bringing them into the formation," he explains. "That's what we are doing right now. All the divisions are changing in terms of how they work, and in 2010, I hope everything comes together and we're able to show the formation or air display."

In so hoping, Näf is counting on the global airline industry defying gloomy expectations for 2009. The International Air Transportation Association has forecast worldwide $4.7bn losses this year as passenger demand continues to slide. Of that figure, Middle East carriers are expected to lose $900m during the same period.

On the flipside, IATA has predicted load factor rises for Middle East airlines this year, although these will likely be offset by capacity increases. In addition, oil prices have dropped from last year's $147 high to around $50 per barrel, spelling the end of crippling fuel costs for all carriers. But these factors alone will not help Gulf Air reach its break even target and "claim the gold medal", as Näf puts it.

"If you want to go to the Olympic Games and win the gold you have targets," he says. "If you don't hit them, you don't win the gold and you have to have a good explanation.

"The message is clear: we are in a turnaround. The industry lost $8bn in 2008, according to IATA, and $4bn alone went in the last quarter.

"We are entering tough times with fares being slashed and yields coming down. Our target is 2010 and it's a challenge but it may be 2011 - who knows?"

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READERS' COMMENTS

Gulf Air
Posted by The Don, Dubai, United Arab Emirates on Friday 3 July 2009 at 14:07 UAE time


Any new CEO for Gulf Air needs to fight two internal issues that are affecting the airline performance and profitability: Job Security for under performing staff and Internal Pressure Groups formed from employees. Wining battles at these two fronts is key for implementing performance improvement initiatives for this airline.

Wish the Bahraini government see this and put it on top of the priorities of support to any new CEO.

Gulf Air's woes
Posted by Alamo, Dubai, UAE on Monday 11 May 2009 at 15:09 UAE time


Rather than concentrate on improving this or that, this CEO like many others who preceded him, fails to address the core issues plaguing the organisation, namely clientelism.

Regardless of what his competencies are, as long as there are useless employees spending their time in the canteen instead of delivering on their accountability, GF will remain the failure of the industry.

Slightly blinkered comments....
Posted by Colin, Abu Dhabi, UAE on Sunday 12 April 2009 at 12:55 UAE time


I was born in Bahrain and lived there for about 14 years. In that time my family and I used Gulf Air extensively. In the 80's they were the ME region's number one carrier.....but bad management and a lack of focus have all but turned them into a little known carrier from some ME island in the gulf.

Thinking that a call centre improvement is the first thing needed or indeed all that is needed to build customer expectations and loyalty is, as I say, slightly blinkered. If the underlying business model of the company is flawed then you are buying into a world of disappointment if the call centre sells you the ideal flights.

As the CEO says, they have made some significant changes across a lot of the companys departments, but due to high oil prices and the global recession these have not been fully realised. I guess the point is, is that he has instigated the reforms needed to ensure stability of the company and in better times the improved possibility of breakeven and then growth.

I for one wish Glf Air all the best in their endeavours, although I concur again with the CEO when he says that nationalisation is one of their goals, but to place an underqualified, skill bereft Bahraini in a position of responsibility that could jeopardise all the hard work so far is again something that anyone who has run a company knows......is tantamount to business suicide. By all means nationalise.....but do it slowly and only after the national has been given the opportunity to prove that they are competent in the position. You wouldn't employ a guy who works in Dairy Queen to manage the nations airline would you?? Not unless you train him and nurture him beforehand......I would hope

Gulf Air used to be a source of pride for Bahrain...
Posted by Quicksmile, Manama, Bahrain on Saturday 11 April 2009 at 11:16 UAE time


This CEO seems to go backwards. The airline is far more internally focussed. The most critical aspect, dealing with customers, is not even mentioned in his strategy for turnaround. The World Wide Call Centre is a shambles.

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