SHAFAQNA (Shia International News Association) -- Bahrain’s lossmaking Gulf Air will slash costs this year by cutting routes and making redundancies. Amid tough competition from regional supercarriers, such as Dubai’s Emirates, Abu Dhabi’s Etihad and Qatar Airways, the region’s oldest airline has been hit by the unrest that has destabilised the tiny Gulf kingdom. Protests led by the majority Shia against the minority Sunni-dominated government continue to undermine its services-led economy. In the aftermath of large-scale demonstrations in 2011 and the ensuing bloody crackdown on dissent, state-owned Gulf Air stopped serving several once-profitable routes in Iran, Iraq and Lebanon.
The government has blamed Shia Iran and its regional allies for fomenting the unrest, a claim questioned by diplomats and an inquiry commissioned by the king.
The airline, founded in 1950, said the restructuring plan would result in cost savings of 24 per cent by the end of this year, with further savings envisaged for 2014 and beyond.
Sheikh Khalid bin Abdullah al-Khalifa, the deputy prime minister, said the plan would free up precious government resources.
“The restructuring and subsequent financial rehabilitation of Gulf Air will liberate treasury resources for domestic investment and result in a transformed national carrier,” he said in a statement.
Gulf Air is believed to lose as much as $1m a day, according to people aware of the matter. Last year, parliamentarians debating the future of the government-backed airline said Gulf Air had lost about $5bn since 2009.
Cutting unprofitable routes would help increase revenue per available seat by 9 per cent this year, the airline said.
The three-year strategy, unveiled by the board of directors appointed last November, would aim to “maintain the sustainability of the airline”, the statement said.
The airline did not reveal the number of expected redundancies, but job cuts will be politically sensitive, given that thousands of Bahrainis work for the national carrier.
“Priority will be on retaining the most productive employees with focus on maintaining key talent,” the statement said.
Gulf Air will boost operations in the Middle East and north Africa, saying that would help maintain its lead in serving regional destinations, while cutting eight unprofitable routes.
The statement did not say which destinations will no longer be served. The airline has previously announced the termination of routes to Copenhagen, Rome, Colombo, Kathmandu and Dhaka.
Gulf Air last year reduced its order of Boeing Dreamliner 787 aircraft from 24 to 12.
Source : FT