Gulf Air must find its niche

22 August 2008
Naf has inherited a poison chalice as CEO at Gulf Air and his efforts to stem losses have been severely hampered by soaring fuel prices.

Bjorn Naf inherited a poisoned chalice when he took over as chief executive officer (CEO) of Gulf Air last summer. His predecessor had announced losses at the company of $1m a day, before departing after just six weeks in the job.

Oman had pulled out of the business earlier in the year, and the chairman at the time alienated the airline’s foreign staff by making it clear that Bahraini staff would be the company’s priority going forward.

The amiable Swiss has been forced to walk the tightrope between making the cuts necessary to make Gulf Air a viable business, without taking steps that might aggravate his Bahraini paymasters. Efforts to slash the workforce are particularly delicate - flag carriers are potent symbols of national pride and media reports of job cuts are embarrassing.

Naf’s efforts to stem the company’s losses have been hampered by the soaring fuel prices of the past 12 months, but he has been given time and money by the board to turn the business around. This has allowed the airline to build a modern, fuel-efficient fleet.

However, clouds still hang over Gulf Air. Bahrain’s parliament has been asking questions about the state of the company’s finances, and Naf needs to open up its books to eliminate suspicion and bring clarity to the airline’s strategy.

The CEO is realistic enough to recognise that Gulf Air cannot compete with the region’s pre-eminent carriers.

The deep pockets of UAE and Qatar may have carried their long-haul carriers out of Gulf Air’s sight, but Naf is right to target a place in the second tier of regional airlines.

Royal Jordanian has been turned around to become a well-managed and financially sound airline occupying a strong niche market. If Naf can stay on his tightrope, Gulf Air can follow suit.

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