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23 April, 2013 Manama,Bahrain
Gulf Air’s First Quarter Financial and Operating Results Demonstrate Solid Restructuring Progress
H.E. Sheikh Khalid bin Abdulla Al Khalifa, Chairman of Gulf Air Board of Directors.

Gulf Air, Bahrain’s national carrier, today announced a solid fiscal and operational performance for the first quarter ending March 2013. The airline is currently three months into a restructuring strategy driven by Gulf Air’s Board of Directors, led by its Chairman H.E Shaikh Khalid bin Abdulla Al Khalifa, the Deputy Prime Minister, and implemented the airline’s management team.

 

For the first quarter of 2013, Gulf Air reduced its overall losses by approximately 50% compared to the first quarter of 2012. This was realised principally through a 21% fall in year-on-year expenditure driven by reductions in aircraft leasing fees, flight-related charges and staff expenses in addition to the closure of loss-making routes.

 

Further, consistent with the restructuring plan that was presented to the Members of Parliament in November 2012, for the first quarter of 2013 the airline performed 11% better than forecast. This positive variance was due in large part to a top-line revenue performance that better than planned, realised through network refinement and the aggressive implementation of a series of commercial initiatives.

 

Gulf Air’s passenger yield was 21% higher compared to the first quarter of 2012. The increase coincides with the successful realignment of the airline’s network and fleet, a stronger traffic demand in the region and significantly higher sales in Bahrain.

 

On the cargo front, in line with the modest improvement in airfreight globally, Gulf Air Falcon Cargo freight recorded a 3% increase in revenue against first quarter plan.

 

The national carrier has completed its network realignment strengthening its Middle East and North Africa (MENA) operations while maintaining strategic links to select points in Europe, the Far East, India and Pakistan. With a focus on high-demand and high-yield point-to-point routes that connect Bahraini businesses with regional markets, 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.

 

In parallel, to meet the requirements of Gulf Air’s realigned network, the airline has been engaged in exhaustive negotiations with its lessors to return surplus aircraft. Gulf Air now operates a mixed wide and narrow body all Airbus fleet consisting of 26 aircraft. Using predominantly new aircraft with high specification on-board products, the airline’s fleet is one of the youngest in the region with an average aircraft age of just 4.7 years.

 

Gulf Air remained a global leader in punctuality. In January, February and March the airline ranked number one among the full service carriers in the Middle East and was ranked in the top ten globally. An important factor for customers, punctuality is a key performance indicator of the restructuring strategy. Improving efficiency across the organisation is another. 

 

In the first quarter of 2013 Gulf Air started the process of reviewing and re-engineering its internal procedures, improving its business processes and aligning its workforce to meet its revised fleet and network requirements. Consequently, a number of positions have been affected by the restructuring however the rightsizing process has been, and will continue to be, implemented in a fair and transparent manner. Gulf Air continues to be a key employer committed to developing a national workforce of aviation professionals. With 62% of the airline’s total workforce being Bahraini, Gulf Air leads the way amongst its regional competitors in terms of nationalisation.  

 

In spite of a turbulent three months characterised by jet-fuel costs of over $130 per barrel, the on-going economic concerns regarding the Eurozone debt problems and growing competition regionally, Gulf Air’s first quarter financial and operational results demonstrate the significant restructuring progress that the national carrier has made in improving productivity through the reduction of manpower, increasing revenue and reducing operational costs. Tough decisions taken over the past three months by the airline’s Board of Directors and its management team have started to yield positive results with the foundations firmly laid to put Gulf Air on a path towards long-term sustainability.

 

In the coming nine months the operating environment will continue to be challenging, however, Gulf Air’s Board of Directors and management team are committed to continuing the implementation of the restructuring strategy. Through process and productivity improvements and procurement savings across the business, the national carrier will continue to reduce expenditure while transforming into a more dynamic and efficient airline. Gulf Air will continue to explore potential commercial opportunities across its existing route network. Recognizing additional capacity opportunities across the region the airline’s management team has initiated discussions with various Civil Aviation Authorities to request additional frequencies. Gulf Air will also continue to invest in upgrading its products. A retrofit of four A330 aircraft used primarily on London and Bangkok to introduce fully flatbed seats in Falcon Gold class, revamp Economy class and upgrade the in-flight entertainment system, is expected to be completed before the end of summer 2014.

 

Gulf Air is on a firm footing, yet tough decisions and challenges remain, to achieve the strategic goals and objectives of its 2013 restructuring plan. With the continued development of synergies between the national carrier’s key stakeholders – the Bahrain Civil Aviation Authority, Bahrain Airport Company, Bahrain Airport Services, BAPCO and the Government among others, Gulf Air is on track to strengthen its position as a key national infrastructure asset supporting the Kingdom’s future economic growth and better serving Bahrain and its customers.

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