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Sun 22 Apr 2007 12:00 AM

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Gulf Air: turbulent times

Each week Arabian Business turns the spotlight on a leading company.

So why has Gulf Air been in the news so much recently?

It's in the process of undergoing a dramatic restructuring plan. In the space of the last few weeks, three top executives have been fired, six long-haul destinations dropped, and the airline has announced that it is cutting 25% of the workforce - 1500 jobs - and reducing its fleet from 34 to 28 aircraft making Airbus its only aircraft vendor. Safe to say there's been a bit of turbulence!

Why all the change?

The airline is losing serious cash - over US$1m a day, as it happens.

That's a lot of cash!

Yep and on top of that the airline its forking out US$822m in cash in order to improve the fleet and implement the other changes.

Who's piloting these changes?

It seems that Andre Dose (former CEO of Swiss carrier Cross Air), who was appointed as the new CEO in January 2007, has a lot to do with it. He was personally responsible for firing the three execs. "There are no quick fixes and changes must start at the top of the business," said Dose.

So do you think there will be more boardroom reshuffles?

Possibly. Dose has already changed the organisational structure of the company. He's also considering some tough new measures that include cost-cutting across the airline.

Didn't Gulf Air also have to ground some of its planes last month?

Yes. It grounded all of its Boeing 767 jets when traces of corrosion were found on one of the planes. Coincidentally, Gulf Air recently announced that it is selling its nine Boeing aircraft in order to create a streamlined, all-Airbus fleet of 28 planes. According to media reports, the airline will buy or lease four brand new Airbus planes by early 2008, and a further eight aircraft before the beginning of 2010.

Who will be implementing all of the reforms?

Bahrain Mumtalakat Holding Company is implementing the reform plan through its representative members on the Gulf Air board.

How popular is Gulf Air as an airline?

Very. The carrier serves over seven million customers every year and accounts for 70% of Bahrain International Airport's traffic. It contributes US$770m to the country's annual GDP and so is considered by many as part and parcel of Bahrain's future.

So what does the future hold?

At present, the governments of Oman and Bahrain each own half of Gulf Air, however, earlier this month Gulf Air's vice chairman Mahmood al-Kooheji said that Bahrain had agreed with Oman to increase Bahrain's stake in the firm to 80%. Apparently Bahrain is seeking 100% ownership of the airline - so let's just say that the struggling carrier's future is still very much up in the air.

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