Gulf Air has announced that the process to ensure the smooth withdrawal of the Emirate of Abu Dhabi over the next six months has commenced. With the Governments of the Sultanate of Oman and the Kingdom of Bahrain reinforcing their commitment to the continuity and ongoing development of the airline, a task force has been formed to oversee some key actions to help ensure the most appropriate size and shape of Gulf Air in the future.
Over the next 90 days, the team will deliver an enhanced strategic plan having fully reviewed the company’s organisational structure and route network.
“As we complete the smooth withdrawal of Abu Dhabi from its position as a shareholder, we are going to focus far more on a two-hub strategy, in Bahrain and in Muscat,” said Gulf Air President and Chief Executive James Hogan.
“As a result, we must look at every element of our business, to establish whether we have the right systems, the right structures and the right focus to meet this two-hub strategy.”
When Abu Dhabi’s decision was originally announced, he added, it was stated that the core approach to business and the core business strategy would remain absolutely the same - and this remains true.
“We will continue to operate under a strict commercial mandate, basing every decision on commercial grounds. We will continue to develop the award-winning services that define us as a leading boutique brand, with the best regional and Middle East network and both our leading brands.Ê It is very much business as usual,” said Mr Hogan.
There are however some areas in which Gulf Air will now have the opportunity to embrace positive change.
“A two-hub strategy gives us the opportunity to review our network and bring in even greater business synergies in route planning,” he said.
“It also gives us the opportunity to review our business operations and our cost base to ensure the long-term future prosperity of the airline.
At the end of the 90 days the new strategic direction will be submitted to the board for review, at which time a further announcement will be made.
Project Falcon was a recovery plan for Gulf Air, getting its business back into sustainable commercial shape and this has been achieved. Since then, Gulf Air has come under tremendous pressure as a result of fuel price rises.
“Every $1 increase in the price of fuel is costing Gulf Air more than $6 million a year - and we have seen many price surges this year,” saidÊ Vice President Finance Ahmed Al Hammadi.
“We are not alone in facing pressure from fuel prices. IATA, the airline industry association, earlier this month announced it estimated total airline losses this year would reach more than $7 billion as a result of the fuel price rises.
“We have applied fuel surcharges where the competitive environment has allowed us to do so - but on many routes, we have been unable to impose them.Ê That means the surcharges have covered only a small part of the extra costs from fuel.”
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