Gulf Air troubles continue – Sydney – Bahrain route could be axed

With massive restructuring and streamlining underway in longstanding Middle East carrier Gulf Air under its new CEO, analysts believe that the carrier’s Sydney – Bahrain route may be chopped.

With more and more airlines seeming to sprout out of the Middle East ever day, including Emirates, Etihad and Qatar, with these newcomers changing the face of aviation between Australia and Europe, all is not rosy in the sand dunes, with the former aviation leader in the region, Gulf Air in serious trouble.

With CEO, Aussie James Hogan leaving Gulf Air to join Etihad, the troubled carrier named former Crossair and Swiss International Air Lines CEO Andre Dosé, 49, as its new CEO, to take office on April 1.

In addtion, Omani Minister of Transport and Communication Sheikh Mohammed bin Abdullah Al Harthy also took over as chairman on Jan. 1.

Since Mr Dosé’s’ arrival things have been moving pretty speedily with within a week of taking an announcement of a reduction of his senior staff being made in order to, “drive the necessary efficiencies and to allow our management to focus on our customers,” with VP-Finance Ahmed Al Hammadi, VP-Services Tariq Sultan and VP-Business Units Ali Murtada leaving the airline.

By April 11, Mr Dosé had made even more progress with the airline continuing its restructuring, announcing approval of a plan “aimed at significantly reducing company losses over the next few years.”

At the same time he was experiencing some serious fleet problems with reportedly the whole of the Gulf Air 767 fleet having been grounded for technical reasons thought to be structural cracks, with substantial resulting and regular cancellations of Sydney Bahrain services among others.

What is clear though is that the axe is out, with Gulf Air’s Board of Directors approving a new restructuring plan which will involve a capital injection and a fleet reduction to significantly reduce company losses over the next few years, with Dosé saying that the Board unanimously endorsed the plan which will involve some tough new measures including cost cutting across the entire company, streamlining the structure of the organisation and making network operations more efficient.

He said, “We have the full support of the board for all the measures that have been proposed in order to secure Gulf Air’s future,” adding, “All our actions will be focused on the four key issues Safety, Punctuality, Customer Service and Profitability.”

“To turn our operations around we need a real cultural shift inside our organisation and to achieve this we will be guided by the principles of teamwork, self-initiative on all levels of the organisation, reward, openness and simple processes!”

He said, “At present Gulf Air is heavily losing money every day.”  “This has to stop.” “The shareholders have guaranteed a capital injection to cover past costs, fund the restructuring process and invest in future operational improvements.”

“But they expect us to make sure that this money is wisely spent and that it will help secure a sustainable basis for a strong Gulf Air.”

Mr Dosé confirmed that to improve the profitability of the company Gulf Air will reduce its fleet from 34 to 28 aircraft and to one single manufacturer, Airbus and at the same time network operations will be improved by reducing ground-time of the aircraft and limiting connection times for the passengers.

To cope with these tasks Gulf Air’s organisation is also being streamlined and simplified, with the new organisational structure comprising four divisions, each headed by an Executive Vice President in Sales and Marketing Lee Shave, Operations Bjorn Naef, Finance and Administration Ismail Karimi and Network Hashim Mahmood (acting).

Mr Dosé said, “We believe these measures are in the best interest of the people and economy of the Kingdom of Bahrain as well as those of our other shareholders and with the support of everyone involved, we will get Gulf Air back on a firm financial footing and make it an airline that is loved by its customers.”

Full details of the restructuring plan will be revealed next week with Robin Middleton Acting GM for Gulf Air in Sydney since the departure of Cramer Ball to Etihad also, refusing to comment on the content of that restructuring or that the Sydney – Bahrain route was one of the routes that would get the chop.

Analysts are of the opinion though that next week’s announcement will concentrate on the slashing of a number of unprofitable routes and that along with others, the Sydney – Bahrain route, which is thought to have been unprofitable for some time, one that will go, mainly due to the heavy aircraft requirement to operate the schedule, with the aircraft potentially more profitably deployed elsewhere.

Interestingly, this was also amongst the reasons for Austrian Airlines pulling out of Australia last month.

David Baker, Gulf Air’s PR representative in Australia would not be drawn either on the issue of the termination of the Sydney route, commenting that the company had just appointed three new sales managers in Sydney and is currently considering application for the post of GM, which might be considered an unusual action for an airline rumoured to be closing down a route.

He also said that Gulf Air had enjoyed a huge increase in high revenue and high yielding business and first traffic in January.  

Report by The Mole