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Majali is under no illusion that he faces a difficult task as Gulf Air CEO.

How Gulf Air's new CEO aims to unite the workforce to ensure the future survival of the airline.

Gulf Air's chairman, Talal Al Zain, revealed recently that he had approached eight airline chiefs before "finding the right man" to take on as CEO of Gulf Air. The airline's previous CEO, Bjorn Naf left the position in June 2009 - for reasons that remain unexplained by Gulf Air executives - and it was clear from Al Zain's comments that filling the vacancy had been a difficult process.

It is no secret that Bahrain's state-owned national carrier has been plagued with problems - ranging from heavy financial losses to rumours of major rifts between CEOs and Bahraini government ministers - but the carrier's fortune could be set to change following the appointment of its new head, Samer Majali.

Majali is the third chief executive since 2002 and he is charged with not only relieving the government of the burden of having to finance the airline, but also altering the route strategy. Gulf Air, which doesn't regularly report earnings, said in 2007 that it was losing US$1 million a day. However, through his previous role as chief of Royal Jordanian Airlines, Majali has become well-versed in negotiating the challenges posed by operating a cash-strapped airline.

During eight years at the top he carried RJ through financially turbulent times, oversaw its privatisation and led its integration into the Oneworld alliance before exiting the post in July 2009. Now, it can be said that the future of Gulf Air rests in his hands, as he attempts to lead the business to the similar financial successes seen by that of RJ.

But as he maps out the future of Bahrain's troubled airline, it is clear that rockier times lie ahead. On his entry into RJ in 2001, Majali was forced to lay off some 500 employees, which amounted to around 13% of the airline's workforce. Right up until Majali left to join Gulf Air he says that he was "removing staff" and admits that his ruthless, but necessary, cost-cutting methods may have to be applied to Gulf Air in order to guarantee its survival. "It is too early to say if these numbers will be removed from Gulf Air, but we cannot rule out the possibility of job losses.

The fact remains, that the airline has become a financial burden to the Government of Bahrain. In its current state, the business is unsustainable and we have been receiving subsidies from the Government during the last few months."

According to IBA Group aviation analyst Usman Ahmed the problems began around a decade ago. "If we go back 10 years, Gulf Air was the second largest airline in the Middle East after Saudia, but in terms of popularity and service quality it was by far the best in the region.

"Gulf Air was a joint venture between Abu Dhabi, Bahrain, Qatar and Oman until December 2002, when Qatar pulled out, followed by Abu Dhabi in 2006 and Oman in 2007, leaving Bahrain as the sole owner of the airline. This was probably the largest set back for Gulf Air and it never seems to have recovered after these exits."

The CEO is quick to put down the rumours that a "list of people waiting to be fired" exists, but admits that the airline will "not look to replace those who leave or retire", and every effort would be made to preserve the employment of Bahraini nationals. "They are cheaper than ex-pats," Majali adds.

Prior to speaking with Aviation Business, Majali had addressed the airline's anxious employees at a presentation held close to Gulf Air headquarters in Bahrain. Its purpose was to announce an emergency strategy review of the flagship national carrier.

"I had to speak with our employees before speaking to the press, so they understood that the new business strategy would involve re-fleeting the airline to make it necessary for this region, as well as implementing routes that generate a higher rate of yields compared to the current network," he explains. "We need a pragmatic product offering that can be offered all the time, all year round and place Gulf Air on a solid commercial footing."

But there is no quick-fix. The new CEO stresses that it will take some time before the airline begins to see the financial benefits. "The strategy will unfold over the next few months and the programme will continue for two years or so; although I hope to see the first signs of a turnaround before the end of the year."

In fact, at the time of interview, Majali had already begun to rationalise the fleet and network and subsequently the carrier made its inaugural flight to the Iraqi capital of Baghdad on September 1. The move marks the first of five routes to cities in Iraq to be serviced by Gulf Air, including services to Najaf and Erbil, which commenced on September 15.

"The decision to fly to five cities in Iraq is an excellent one and shows that Gulf Air is actively identifying opportunities," says aviation expert Ahmed. He advises the airline to consider also flying to Morocco, Kenya, Mauritius and major cities in Eastern Europe. Japan, Indonesia and Amritsar should also be investigated, says Ahmed. "Whether there is enough interest from the Gulf region or from Asia can be determined easily."

So far, Majali has not cancelled any existing aircraft orders and admits that the wide body aircraft due for delivery in just over two years could not arrive soon enough. In addition, the airline has taken out a US$70 million bank loan to help fund plane acquisitions made last year, while its five ageing A340-300s are available for sale-leaseback, a sign that the carrier is heading in the right direction, says Ahmed. "The decision to withdraw the A340s is a sensible one; any aircraft that does not fit into the new operations, simply need to be replaced."

JLS Consulting director John Strickland agrees that the airline needs to pursue commercial strategies that will attract customers, but also kick-start profitability. He advises a three-fold approach: cutting losses; improving the company's focus; and retaining and building the motivation of staff. The latter is high on Majali's ‘to do' list. Aside from executing a profit-making business strategy, Majali concedes that his biggest challenge will be to engage with the airline's huge workforce. "I came to this job on my own. I don't have a whole management team with me and it will take some time to disengage from the old way of working, but the staff need to believe in their leader.

"It is not a case of abracadabra and things will change. It is a big company with a lot of inertia, but there are also people here that have lots of ideas that have never been aired. If you get management involved in the formulation of the strategy, it means you get buy-in and you have the ownership to carry something forward."

However, Majali is preparing himself for every eventuality. "If after a while, I find certain people not working out then my strategy will change. Altering the mindset of the staff could take a long time - maybe even a generation - so we have to ask them to give more than 100%. The fact remains that we are not doing well and a superhuman effort is required to turn this business around."

Ahmed agrees that one of the CEO's biggest challenges will be administering a cultural change, but the industry is confident of Majali's abilities. "Convincing people to change their working attitudes, which have now existed for number of years, is a very difficult task to accomplish. But Majali has solid experience.

"Gulf Air is somewhat different to Royal Jordanian, but he is known for pushing boundaries and we anticipate some innovative changes ahead."

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