Bahrain's Gulf Air to cut costs by 24% in 2013

Gulf Air has said that it will cut costs by 24 percent this year as it puts its restructuring programme into place.

The loss-making Bahraini flag-carrier has suffered due to strong competition from nearby Emirates Airline, Qatar Airways and Etihad Airways, and cut eight non-performing routes last year.

“The restructuring and subsequent financial rehabilitation of Gulf Air will liberate treasury resources for domestic investment and result in a transformed national carrier,” said Sheikh Khalid bin Abdulla Al Khalifa, Gulf Air’s new chairman.

Gulf Air is now focusing on Middle East and North African routes, as well as providing a limited number of routes to selected European and Asian markets.

In a statement, the airline said that its network realignment would help it move “away from low-yield transit traffic and concentrated on high-demand and high-yield point-to-point routes”.

Under former CEO Samer Majali, who left Gulf Air at the end of the year, the airline had already revised its orders with Boeing and Airbus in a bid to save roughly US$2.5bn.

Cost-cutting will also extends to Gulf Air’s staff. The airline said that “right-sizing would be implemented across the organisation”. In December, it was revealed that the airline could be forced to hire 100 unemployed Bahraini pilots, despite plans to slash its overall headcount by as much as 1,800. 

“The plan will result in cost savings of 24 percent by the end of 2013,” the Gulf Air statement read. “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 percent in 2013 through improved revenue management and sales, frequency adjustments and route cancellations.”

The statement also indicated that the restructuring period was expected to take three years.