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Tue 1 Sep 2009 01:50 PM

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Gulf Air CEO open to merger options

Airline's new chief Samer Majali says strategy being worked on to find best way into profitability.

Bahrain’s loss making national carrier Gulf Air is open to merging with another airline, and will consider job cuts in a bid for profitability, new CEO Samer Majali said on Tuesday.

Senior executives of the company, which currently loses between $700,000 and $1m a day, were overhauling strategy in the hope of finding a niche in which to thrive, he added.

“Gulf Air has never really had the chance to rethink its role, and whether or not it should be looking for a niche. And so this is the process that we are thinking about now. That is the essential thing; to find a niche for the airline," he told Arabian Business.

"A niche in which we can play a leadership position, rather than being a follower on all of the route segments that we compete on with everyone else. That’s essential to the way we move forward.”

Gulf Air is still to take delivery of an order of 15 Airbus A320s, 20 A330-300s and 24 Boeing 787 Dreamliners.

Asked if part of the rehaul of the company might see this order adjusted, Majali said: “It could, yes.” He would not specify whether the order would be increased or decreased.

On the subject of job cuts, Majali, who has been in his job for one month, said he was prepared to make them if the findings of the strategy review made them necessary.

He said: “Yes [I am prepared to make them]. But there are many different ways of making job cuts. One of them is firing people. Another is not employing new people, or allowing contracts to lapse. Or there are voluntary redundancies.

“If you go in with a hatchet and you fire a thousand people, that does nothing for the company. It creates bad morale and bad feeling and so on.

"You do reduce the staff, but you do it in a manageable format, in a manageable fashion, working with the people, working with the staff, working with the union. You do all kind of packages and so on and you gradually reduce the level to the level that you need.”

He added he was keen to retain industrious Bahrainis who work for the airline.

Majali, formerly CEO of Royal Jordanian, is Gulf Air’s fourth CEO in three years. The company, once the leading Gulf carrier, has struggled in recent years to compete with ambitious rivals such as Emirates, Etihad, Qatar Airways and Air Arabia.

“The main target now is not to make a loss...How long will that take? Well, five years is too long, one year is too short. Can we stop making a loss in three years? I don’t know. That would be making promises that I don’t know if I can keep,” Majali said.

Asked about rumours of Gulf Air merging with another carrier in the region, Majali said: “Target one is to get the airline of a solid commercial footing and to improve the quality of our service so Gulf Air is a very good carrier.

"That has to be done first, but if this could be supported by getting into stronger code shares or even alliances, or potentially a strategic partnership with another airline, that is something we are looking at. You need a like-minded airline. It has to make commercial sense.”

The full interview with Majali will be printed in Arabian Business magazine, out on Sunday.

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John 11 years ago

Gulf has been with us forever, yet it is the most disrespected of the regional airline brands due to incompetent management in the past, politics and a simple lack of consistency. Maybe this new guy is going to do the trick and return the Golden Falcon to its halcyon days when it was a pleasure to fly on it. Merger talk is positive too, because one of the other Gulf carriers might see gold in them that hills. If you have been in the Gulf for a few decades you can't help but remember the service, the liquor that flowed and the big planes.

Manoj 11 years ago

During the busy seasons like School Holidays, Eid & Christmas there is a familiar sight in Bahrain International Airport. Enraged & Frustated passengers cursing and pleading with Gulf Air. And the Airport resemble a railway station with people sitting & sleeping on the ground and in front of Gulf Air counters. Because you see, Gulf Air has a strange policy. They will overbook flights and seats are finally allotted on a first come-first serve basis. At least 20 to 30 passengers with confirmed booking are turned back on most of the flights and Gulf air staff will be non-chalant and unapologetic. They will tell you that it their policy and you can take it or leave it. And in the process if you are missing important family functions or medical emergencies ; that is your problem & gulf air does not give a damn. Again Gulf Air fares are the highest in the region when compared to other competing Airlines and in return you get the poorest service. So many passengers like me have heaved a sigh of relief when a budget Airlines called Bahrain Air started recently which gave us an alternative. Therefore I am not at all surprised that Gulf Air is making loss and is facing a crisis. They are only getting what they deserve.

Siraj Kuvakkattayil 11 years ago

I fully agreed with Mr. Manoj, My friend who travelled to Kochi for his Mother’s Funeral by Gulf Air reached 2 days later in Mumbai. The Gulf Air Staff Never heard his heartfelt feelings. If the new CEO is not improvising the services, he will be another CEO will replaced soon.

Harry Barracuda 11 years ago

The first thing Majali needs to do us cut down on the needless upgrades for staff travelling on staff tickets. If you are going to upgrade anyone, upgrade the paying customers who might just get a taste for your airline and keep flying it (or even consider the premium cabins!). Too often have I seen locals enjoying the spoils up the front because their friends happen to be running check in. This has been going on far too long!

Sultan 11 years ago

No doubt that Gulf Air is the mother of all airlines in the Gulf. Its history reflects the golden era of Tri-stars white glove service which was introduced in late 70's. But again what did all the CEO's did to maintain the heirarchy and traditions of this airline. Samar Majali has taken over this airline in the most crucial times. He is going to be the 6th CEO in eight years and only prevailing situation would force him to quit this position very soon. As a industry analyst, Gulf Air needs to set its foundation from the beginning and invest in its staff rather flush out experienced and trained talent which other airlines in the gulf or else where will benefit from their skills. Another words laying off staff is NOT the solution. But for un-professional leaders - this seems to be an easy solution to prove cut down on the costs which is totally wrong decision. Instead talking mergers - Why dont the new CEO suggest to join STAR alliance or even one world airlines which sounds to be more beneficial for all and reduce cost code sharing world wide.

Anis 11 years ago

I have travelled by Gulf Air many times in the past but I must confess the service has been poor. Flight attendants think people from the Indian sub-continent are inferior class. There may be workers from India working on construction sites in the Middle East but it is wrong to generalise. The construction workers are out here because they are illiterate and want to earn more money than they do in India. I am a professional and part of a decision taking body in the region. I am narrating below my last flight on Gulf Air. During the flight from Qatar to Bahrain on way to India, I had forgotten to keep a very small bag under my seat in the cabin locker, as I was trying to make my nine-month old son settle down on his maiden flight. Suddenly a non-European flight attendant and one hailing from the Mideast walked up quickly, pointed to the bag and roughly said, "Take the bag and put it on top." I gave him a stare and slowly put it into the cabin locker. Thereafter on the flight I was able to see various other instances of other nationalities being politely asked to do the same and also being helped to lift their luggage. Since this incident, I have stopped travelling by Gulf Air and am happy to be flying on Emirates ever since. People are watching all the time and it is high time customer services improved if Gulf Air has to return to profitability.

Joe 11 years ago

As an ex 'Gold for Life' FF with GF - The best decision I ever made was to walk away from GF. They never gave me value, I was treated poorly as a high teir premium pax for too long. The locals working for GF either in the air or on the ground were so unprofessional most of the time. Occasionally there were outstanding locals but very rare indeed. The aircraft are poor, service is poor, IFE is poor, Food is going downhill at a fast pace, boarding is ALWAYS a shambles. The last straw for me was an email response to an enquiry to the Gold FF desk...it was 2 sentences abrupt, rude and didn't address my concerns nor did it even give a proper. So I took my business elsewhere and am VERY happy. GULF AIR..if you cant run an airline properly get out of the game, to do that you need new aircraft, state of teh art IFE and seats, great food and staff who are customer focused ground and air. STOP TREATING GF as a welfare case...an excuse to maintain local employment -its an airline firstly not social security!!!