Gulf Air Faces Up To The Crisis

In the wake of the dramatic downturn in international air travel, Gulf Air the national carrier of Abu Dhabi, Bahrain, Oman and Qatar is reviewing its options for action to preserve its operations in the immediate future according to Mr.Ibrahim A. Al Hamer , President and Chief Executive of Gulf Air.

He said “following the events of September 11, the industry suffered a global down turn of around 30% in revenue passenger kilometers (RPK). Some recovery has taken place but the industry expects capacity reductions to be between 10-20% over the next three months.


He added that, at the end of August, industry pre-crisis losses were put at US$ 3 billion and these are now thought to be nearer US$ 10 billion , forecasting major difficulties and possible failures without governments’ support.

Mr. Al Hamer, said ” that Gulf Air has made every effort to maintain punctuality , its’ route structure and capacity levels since the crisis began on September 11 , although there has been a serious downturn in the airline’s traffic, in common with the world’s airlines.

” For the month of September , GF showed a decline of 6% in passengers carried, 3.9% in seat factor and 8% in RPK.,” said Mr. Al Hamer. “The two weeks of October show a decline of 20.4% in passengers carried, 10.4% in seat factor and 25.6% in RPK. These results are below break even levels. The comparison is with the same months in 2000. The previously announced schedule reductions will continue for the time being.
” Our present plan is to reduce our fleet from 30 to 26 aircraft during 2002. The reduced capacity and fleet operations will almost certainly result in the closure of some stations and reduction of flights through out our network to maximize yield and maintain load factor to minimize losses. This will lead to reductions in various expense items of the company and we are studying the best ways and means to achieve these with the least repercussions “, said Mr. Al Hamer.

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Gulf Air has recently announced the airline is providing long-serving employees of the four owner states with an early retirement package with the approval of the company. Volunteer retirees accepted for the scheme have no restrictions on working for other companies and will continue to receive many of the benefits afforded to current Gulf Air staff.
“So far 100 of these early retirement packages have been approved and more staff will be encouraged to consider the scheme,” said Mr.Al Hamer. “For those not eligible for this scheme, an alternative voluntary severance package is available with compensation based on length of service”.

Gulf Air Board has appointed the international consultants Simat Helliesen and Eichner , Inc (SH&E) to make recommendations for restructuring and restoring the company’s profitability. SH&E will conduct a comprehensive assessment of the airline’s business processes and strategies.
Specific areas under review include route structure, schedules and fleet, engineering and maintenance, finance and human resources, as well as other issues the consultants consider necessary in achieving the overall objective. Upon completion of the review, SH&E has been asked to develop and manage an Action Plan for restructuring with the goal of ensuring the carriers long-term viability and ability to meet the increasing competition for high quality air services in the rapidly growing Gulf Region.
“While this global situation lasts we will continue to monitor and review all possibilities.” Mr. Al Hamer concluded.

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