The board of Gulf Airapproved on 18 December a three-year strategic recovery plan designed to return the troubled regional carrier to profitability by 2006. The three state shareholders - Oman, Abu Dhabi and Bahrain - have also reiterated their support with a new BD 130 million ($345 million) financing package.
'The money has been offered with no strings attached,' says James Hogan, president and chief executive. 'We have been told to take the airline forward on a purely profit-driven commercial basis, which has been a major criticism of the business in the past.' The funds, which will help to alleviate the airline's short-term debt, will be drawn down in two instalments, starting with an initial BD 45 million ($115 million) tranche.
Gulf Air is reported to have amassed total debts of BD 304 million ($800 million). The shareholders have agreed to indefinitely roll over the airline's existing BD 56 million ($147 million) sovereign debt. The airline's present financial difficulties worsened when Qatar, its fourth state backer, announced its intention to withdraw its financial backing in May.
The carrier is planning to beef up its regional operations and open up new long-haul routes. 'We intend to get more network productivity out of our routes in the Middle East, either by nurturing our existing traffic or by enhancing other elements of our service such as business travel within the region,' says Hogan.
The restructuring will also require a rethink of the airline's existing fleet structure, which is based on mostly wide-bodied aircraft. Talks are under way with a number of manufacturers for the acquisition of smaller regional and business jets that are more in line with its new business plan.
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