Oman Air faces decade of losses to enter long-haul market

09 May 2008
Oman Air says it could be 10 years before the national carrier turns a profit, as it expands into the international long-haul market.

The company is preparing for the next stage of its transformation from a regional to an international carrier. A five-year plan to be presented to the board of directors by early June will detail its expansion plans.

The company revealed a $10m loss for the first quarter of 2008, as a result of the airline's expansion last year.

At the time of the results, company officials said it could be some time before Oman Air returns to profit (MEED 28:4:08).

Speaking to MEED, Japeen Shah head of finance at the company, says the experience of other airlines entering the long-haul market suggests Oman Air is facing at least a decade in the red. "Like any other airline moving into long-haul operations it will take a long time [to return to profit]," he says.

"Emirates took eight to 10 years to post a profit and others have taken even longer.

"This is normal. The stakeholders will support the airline's expansion. We have strong relationships with the government and our banks."

Oman Air has had to radically rethink its strategy over the past 12 months. In April last year, the short-haul airline was elevated to become the sultanate's national carrier when Muscat decided to relinquish its stake in Gulf Air. The company has since ordered 14 new aircraft and is seeking an expanded international network.

The five-year strategy will include further aircraft purchases and outline plans to enter the European, North American and Asian markets. The airline currently flies to London and Bangkok but has made no substantial moves into the highly competitive long-haul sector.

"I do not want to say how long exactly it will take to return to profit because much depends on the long-haul routes we choose to go for," says Shah.

"We have seen from the experience of other airlines that some routes mature faster than others, so this will vary."

Shah's team is considering financing options for the 14 aircraft on order.

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