Gulf Air announces rescue plan

Carrier to drop Shanghai, Hyderabad and Bangalore

Loss-making middle east carrier Gulf Air has announced a new strategy to turn around its fortunes.

Gulf Air plans to launch in 20 new destinations in the Middle East, Africa, Asia and Europe, but fifteen other routes are set for closure.

Samer Majali, Gulf Air's ceo, said: "Gulf Air is massively unprofitable and long-term this is not sustainable."

Gulf Air expects to report a loss of BHD193m (£308m) for 2009.

The airline will cease operations in Shanghai, Hyderabad and Bangalore, but hasn't yet announced the timeline for these closures.

Mr Majali also said that redundancies would be "inevitable".

"There has been a slump in demand for travel, there is fierce regional competition from relatively new carriers... All this has resulted in the airline losing considerable amounts of public money," he said.

"Gulf Air currently relies on significant government support, spending far more than it earns. This is clearly unsustainable and the funds could be invested into other important areas of the national economy."

With the new strategy, Mr Majali predicts that Gulf Air will wipe out its debts by 2012.

Over the next year, Gulf Air will focus on matching its existing network to market demand, after which the airline aims to launch new destinations and products.

In a bid to improve customer experience, the airline will focus on new seating and in-flight entertainment.

And in a move to differentiate itself from airlines in neighbouring countries, such as Dubai and Qatar, Gulf Air will not aim to make Bahrain a hub airport, offering connections for transit passengers.

Samer Majali, Gulf Air

Mr Majali said Gulf Air "does not want to become too dependant on transit passengers, which already account for 80% of traffic passing through Bahrain".

"These types of passengers add little to the national economy and continue to drive the price discounting model," he said.

Instead, the airline aims to offer a large number of middle east connections, with other destinations limited to key financial centres in Europe and Asia.

"For the first time, Gulf Air will focus specifically on Bahrain," said Mr Majali, "serving the kingdom with higher frequency, non-stop services to more destinations across three continents."

Gulf Air will order more narrow-body aircraft, in addition to the 15 A320s already ordered, and is looking to sell its five wide body A340 aircraft.

The company is also considering using regional jet aircraft on short range routes.

www.gulfair.com