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Wed 18 Apr 2007 01:12 PM

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Airline reveals strategy to reduce huge losses

Gulf Air is switching to an all Airbus fleet and dropping six loss-making routes to stem flow.

Gulf Air is switching to an all airbus fleet and dropping six destinations to reduce daily losses of US $1 million.

Andre Dosé, president and chief executive of the national carrier for Oman and Bahrain, told reporters that the company will "fundamentally be restructured".

The company's fleet will be reduced to 28 aircraft from 34 as part of the company's $825 million turnaround strategy.

Gulf Air is expected to introduce four Airbus A321 aircraft, retire the entire Boeing B767 fleet and phase out the Gulf Traveller brand. Meanwhile, the Airbus A340 fleet will be replaced with newer Airbus A330 aircraft.

Dosé, who joined Gulf Air in April, also revealed that some routes will be scrapped.

"We will stop operating our heavily loss-making long-haul services to Dublin, Hong Kong, Jakarta, Johannesburg, Sydney and Singapore," he said. "Instead, we will allocate more assets to better serve all-important centres in the Gulf and the Middle East region."

Other measures to revive the ailing company include improving efficiency and customer services and making redundancies. Gulf Air's deputy chairman Mahmood Al Kooheji said the board will discuss the "painful measure" before deciding how many jobs cuts to make.

The company is losing $1 million a day but Al Kooheji admitted the figure increases when other factors such as financing are included. Accumulated losses and costs amount to $675 million.

The turnaround strategy will initially cost $319 million, with share and financial institutions providing the remaining capital.

Gulf Air's management said the restructuring, dubbed the Get Well Programme, could be launched in July, with positive results expected by 2009.

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