Gulf Air, which announced a restructuring strategy last December, spearheaded jointly by the airline’s Board of Directors led by its Chairman H.E. Shaikh Khalid bin Abdulla Al Khalifa, the Deputy Prime Minister and the airline’s management, recorded restructuring progress within a month of its on-going implementation.
Despite a difficult operating environment, the restructuring measures have started yielding results and the strategy remains on track to achieve overall cost savings of 24% by the end of 2013.
A Financially Stronger Airline
In January 2013, through the implementation of prudent cost saving measures and an aggressive efficiency drive the airline reduced its overall losses by over 34% compared to Jan 12, posted 9.6% increase in passenger revenue against its budgeted revenue and, increased its yields by over 8%.
The airline also cut its expenditure significantly through reductions in aircraft lease fees, flight related charges, staff expenses and the closure of four loss-making routes.
Based on the current progress and the estimated forecasts, the restructuring plan is on track to achieve its cost savings target by the end of 2013. Indications are also strong that the Revenue per Available Seat Kilometre (RSK) will achieve the targeted 9% increase in 2013 through the establishment of robust performance frameworks designed to deliver greater efficiencies.
A Re-Aligned Network to benefit customers
The realignment of the airline’s network to strengthen its Middle East and North Africa (MENA) operations progressed as planned in January with the closure of four loss making destinations. The airline remains on course to deliver its strategic goals of effective fleet and resource utilisation supporting the Kingdom of Bahrain and its customers. With a focus on high-demand and high-yield point-to-point routes to connect Bahraini businesses with regional markets as opposed to low-yield transit traffic, Gulf Air continues to differentiate itself from its regional competitors and carve a long-term niche in a highly competitive business environment. The airline continues to hold a leadership position in the Middle East by operating one of the largest regional networks.
Gulf Air is expecting to complete its network realignment by March 2013. It will continue to strengthen its regional markets offering flexible and multiple flight options while providing strategic links to selected European, Far East and India markets.
A Simplified, Modern fleet
The groundwork has already begun to simplify and align the airline’s fleet with its revised network requirements. Successful negotiations were concluded in January to return two leased regional Embraer E90 jets. Further negotiations are on-going to complete the fleet realignment by April 2013. The airline now operates an all Airbus fleet.
The finalised fleet of 26 aircraft with a mix of wide and narrow body aircraft will be optimally utilised to serve the airline’s new network. Using predominantly new planes with high specification on-board products, Gulf Air will operate one of the youngest fleets in the region with an average age of just 4.3 years.
A right-sized workforce
As part of the restructuring plan all cost elements of the business are being rationalized to meet the operational, maintenance and administrative needs of the revised fleet and network including manpower. The majority of the reductions to ensure the workforce is aligned to the business requirements of the organization will be done through a number of measures including non-renewal of contracts, restructuring in outstations, natural attrition and a voluntary retirement scheme.
As per the mandate of the Kingdom’s Government the airline’s priority in Bahrain is to preserve as many positions that can be filled by skilled and qualified nationals. No Bahraini pilots will be affected by the restructuring.
In January a total workforce reduction of 6% was realized. This to date has increased to 15%. In January the airline’s Bahrainisation levels at Head Quarters reached a record high of 85%, delivering on Gulf Air’s commitment to be a key Bahraini employer.
Further right-sizing will be implemented across all levels of the organization and will be done on a performance-based review and individual job assessment against business-critical requirements. The airline is on track to complete all major workforce-related changes within the second quarter of 2013.
On the operational and customer service fronts Gulf Air has seen significant improvements in January 2013; the airline has been ranked among the top ten global airlines for its flight punctuality at 85% and number one in the Middle East region.
With its renewed focus on enhancing customer service both on the ground and in the air, passenger compliments have increased by 25% while complaints have reduced by 24% in Jan 2013 against Jan 2012. The airline’s popular loyalty programme Falcon Flyers has also seen a 9% growth in its membership in Jan 2013 vs Jan 2012.
In January 2013, Gulf Air was awarded the prestigious ISO/IEC 27001:2005 certification for its information security management system following an independent audit that certifies the airline’s IT processes and people including information governance, business support, IT infrastructure and information security are of international standard.