Bahrain’s Gulf Air said on Monday that it has won approval from Airbus and Boeing to amend plane orders in a bid to save more than $2.5bn.
The national carrier said in a statement that it has signed amendment agreements with both aircraft manufacturers to "realign its original orders to meet its long-term strategic needs".
Gulf Air has been in extensive discussions to renegotiate its order book since 2011, it said.
It added that the move had become necessary "in light of the tough economic conditions faced by the global aviation industry over the last 15 months".
The revised Boeing agreement allows the airline to reduce its wide-body 787s Dreamliner requirement from 24 to 12–16 aircraft depending on Gulf Air’s strategic requirements.
These aircraft are scheduled for delivery towards the end of the decade and will replace Gulf Air’s current wide-body fleet.
In addition, Gulf Air has also concluded a deal with Airbus to cancel the 20 A330-300 aircraft it has on order, replacing them with eight A320neo jets, all of which will be delivered by the end of the year. Another 16 A320neo aircraft will join the carrier’s fleet to replace Gulf Air’s single-aisle fleet in “the latter part of the decade”.
Gulf Air CEO, Samer Majali, said: “I am delighted that we have arrived at mutually agreeable solutions in-line with the government directive to put the airline firmly on a path towards sustainability.
"The revised orders reduce our long-term financial liability of approximately $5bn by over 50 percent and the remaining liability more effectively meets Gulf Air’s future fleet replacement and/or growth requirement.”
Marty Bentrott, Boeing Commercial Airplanes' vice president of sales for the Middle East, Russia and Central Asia added: “We appreciate the fact that as a commercial airline Gulf Air has to respond to the changing global aviation environment.
"The revised fleet requirement from Gulf Air reflects this and we are glad to have cooperated with Gulf Air to arrive at an amicable solution. Gulf Air remains a valued customer of the Boeing 787 Dreamliner and we look forward to continuing our strong partnership.”
Last month, Bahrain's king Hamad Bin Eisa Al Khalifa issued a royal decree authorising the government to extend BD185m ($491m) to the carrier.
Once it obtains the funds, the Bahrain-based airline said it will use the money "to pay our suppliers, to pay our debts and for restructuring", Majali said without giving further details.
In January, a government delegation briefed parliament and called for a restructuring of the company for "effective operational requirements".
Although state-owned Gulf Air suffered losses in the wake of political unrest in the kingdom, passenger numbers increased 13 percent in the first half of the year, while seat load factors reached 77 percent, up five percent from the same period a year earlier.
The carrier’s revenues for the first half of the year have increased six percent compared to the same period last year.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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