Gulf Air's half year financial and operating results reflect positive restructuring progress

Currently six 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 managed by the airline's Executive Restructuring Committee headed by H.E. Mr. Kamal bin Ahmed Mohammed, Minister of Transport and in cooperation with the airline's management team, the airline posted its best first half-year results.

In the first two quarters of 2013, Gulf Air reduced its overall losses by over 50% compared to the same period in 2012. This achievement was realised primarily through a 26% reduction in year-on-year costs across the organisation and bolstered by sound revenue results aided by a Q2 yield increase of over 6%.

Gulf Air performed 15% ahead of its financial target in the first six months of the year, a clear indication that the financial and operating restructuring improvements already in place are yielding results. Gulf Air expects to realise additional improvements as it continues to remove excess operational cost from the organisation, renegotiate contracts with certain vendors and suppliers and fine-tune the network.

Commenting on the half year results following a meeting of the airline's Board of Directors, its Chairman H.E. Shaikh Khalid bin Abdulla Al Khalifa said, "Gulf Air's restructuring is firmly on-track, strengthening the airline's position as a key national infrastructure asset and supporting the Kingdom's evolving business needs while freeing additional treasury resources for domestic investment."

Commenting on the scope of the restructuring H.E. Shaikh Khalid bin Abdulla Al Khalifa said, "The on-going restructuring has been implemented across the organisation and modified every facet of the national carrier's operations with a view to putting Gulf Air on a path towards sustainability and aligning it to the Kingdom's evolving business requirements. The Board of Directors remain optimistic about the future performance of Gulf Air based on the results to date."

H.E. Mr. Kamal bin Ahmed Mohammed, Minister of Transport and Chairman of Gulf Air's Executive Restructuring Committee commented, "Gulf Air's results, achieved in an operating environment characterized by volatility and severe competition, reflect a significant achievement for the airline and demonstrate the effectiveness of the restructuring strategy. As a result of fundamental changes made across all areas of the organization in the last six months, the airline is firmly on-track towards delivering its long-term strategic goals. This progress would not have been possible without the commitment and contribution of all Gulf Air's staff and management and I would like to thank them for their support."

"Much has been done, yet there is still much more to do. While the operating environment remains challenging, we are committed to the continued implementation of this restructuring plan. Our main priority over the next six months is to further reduce operational costs and increase sales efficiency. In parallel, we will continue to meet customer needs as well as improving the product to deliver more value on a consistent basis thereby strengthening trust and reinforcing the airline's position as the carrier of choice. These actions, combined with the continued development of synergies between the airline's key national stakeholders, will ensure Gulf Air remains on track to enhance its position as a key national infrastructure asset supporting the Kingdom's ongoing economic growth and better serving Bahrain and its customers," he concluded.

In the first three months of 2013 Gulf Air successfully completed the realignment of its network, strengthening its Middle East and North Africa (MENA) operations while maintaining strategic links to select points in Europe and Asia. During the second quarter, the airline focused on fine-tuning its network to better reflect its business model namely high-frequency services offered on high-demand and high-yield point-to-point routes. The airline increased flights to Jeddah in Saudi Arabia from double to triple daily and adjusted its schedule to a number of key destinations to offer better connectivity. The airline continues to hold a leadership position in the Middle East by operating one of the largest regional networks, continuing to differentiate itself from its regional competitors, carving a long-term niche in a highly competitive business environment.

Following the successful conclusion of negotiations, Gulf Air has now completed the realignment of its fleet to match its new network requirements. The revised all Airbus mixed fleet, consisting of 26 aircraft, allows the airline to better match capacity with demand in certain markets facilitating more effective competition. The fleet, one of the youngest in the region, comprised of predominantly new aircraft with high specification on-board products, allows Gulf Air to operate an efficient, reliable and punctual network. Gulf Air will 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.

In the first six months of 2013 Gulf Air cemented its position as a global leader in on-time-punctuality (OTP). Latest statistics published by FlightStats Data, an independent provider of flight information services, revealed the airline to be the region's most punctual full service carrier for the first half of the year. The data confirmed the airline's average OTP for its flight arrivals to be above 90%.

As part of the restructuring plan all cost elements of the business are being rationalised to meet the operational, maintenance and administrative needs of the revised fleet and network including manpower. Significantly, the largest part of the workforce realignment to meet the requirement of the new fleet and network has now been completed, principally, through a voluntary retirement scheme. Gulf Air has realised a total workforce reduction of 25% year-to-date.

With 63% of the airline's total workforce being Bahraini, Gulf Air has recorded the highest Bahrainisation level in its history continuing to lead the way amongst its regional competitors in terms of nationalisation. Committed to filling as many positions in Bahrain with skilled and qualified nationals, no Bahraini pilots have been affected by the restructuring process. The airline also signed two agreements with Tamkeen. The first offering a number of Bahraini cadet pilots training opportunities followed by a second agreement to provide 33 Bahraini graduates of Tamkeen's aeronautic engineering program two year job training contracts.

Gulf Air will continue to build momentum as it implements the restructuring strategy. In parallel, the airline's efforts to identify additional initiatives to further improve performance will keep the financial trajectory of the airline on-course towards long-term sustainability.