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Thu 25 Aug 2011 10:43 AM

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Gulf Air in talks with Boeing, Airbus to juggle orders

Bahrain flag carrier launches new routes, overhauls plane orders in new strategy

Gulf Air in talks with Boeing, Airbus to juggle orders
Gulf Air announced a trio of new routes to Rome, Entebbe and South Sudan

Bahrain carrier Gulf Air said Wednesday it was in talks with Boeing and Airbus to overhaul its plane orders as it seeks to reposition itself as a largely short-haul airline.

The Gulf state’s loss-making airline said it would seek a new mix of wide and narrow body aircraft and would unveil its new order book at the Bahrain International Air Show in January.

“We are in talks, mainly with Airbus and Boeing, to adjust the old order book to the new demand and the new strategy of the airline…which is to be more regionally-focused,” Karim Makhlouf, chief commercial officer at Gulf Air, told Arabian Business.

“Obviously this requires slightly different aircraft type than in the past.”

The state-owned airline on Wednesday announced a trio of new routes to Rome, Entebbe and South Sudan and said it would increase its flights to the UAE in a bid to grow its local business.

Gulf Air plans to increase the number of flights to Dubai from Bahrain to 14 and add an additional seven flights to Abu Dhabi.

“Dubai to Bahrain our market share is about 45 percent including low cost [carriers] so we already have the highest market share,” Makhlouf said. “We want to grow this market share further…to about 50 percent - we want to denominate that market in the next couple of months.”

Gulf Air in July said it had been forced to push back its break-even point to mid-2013 from 2012 after widespread political unrest in Bahrain slowed tourism to a trickle.  

The airline said it had been hit “badly” in the first quarter following pro-reform demonstrations that saw Bahrain impose martial law and call in troops from neighbouring Gulf countries.

Gulf Air suspended flights to Lebanon, Iran and Iraq in March at the height of its uprising, after what was described as “irresponsible comments” by the countries.

“February and March we had a passenger drop - a significant one – of about 15-20 percent, which is normal if you stop flying to two countries,” said Makhlouf. “We were hit but we compensated as of May, June and especially July quite impressively.”

Bahrain wealth fund Mumtalakat, Gulf Air’s parent company, said in July the loss-making airline was a “challenging asset” for its balance sheet.

“We hope there will be a turnaround in Gulf Air soon, after they launched a new strategy. We will continue financially supporting it for now,” said CEO Talal Al Zain.

Makhlouf said he couldn’t comment on whether additional bail-outs from its parent company would be required but said the airline was working to prove it could be profitable.

“Becoming break-even within the next year means the airline somehow has to be funded in the meantime,” he said. “We are working together with them to prove that this airline can stand on its own feet but in the meantime every airline which is not profitable needs a certain support.”

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