GULF Air has officially launched a major restructuring plan that seeks to reduce its losses and safeguard its future.
The three-year strategy, which includes cutting jobs, simplifying its fleet and re-aligning its destination network, aims to achieve cost savings of 24 per cent by the end of the year.
The airline said it was necessary to "aggressively" address its losses to reinforce the carrier's position as a key national asset.
"Gulf Air is a key national infrastructure asset and provides business links which are important for wider economic development," said Deputy Prime Minister Shaikh Khalid bin Abdulla Al Khalifa, as he unveiled the strategy last night.
"The restructuring and subsequent financial rehabilitation of Gulf Air will liberate treasury resources for domestic investment and result in a transformed national carrier."
No figures were given about possible job cuts but it is understood up to 1,800 staff could be laid off as part of a deal put on the table by the government to secure National Assembly approval for a BD185 million bailout.
It was drawn up to help cut the airline's losses from BD95m to BD58m a year by 2017. "All cost elements of the business will be rationalised," said an airline statement.
"Gulf Air's workforce requirement will be aligned to meet the operational, maintenance and administrative needs of the revised fleet and network.
"The introduction of a simplified structure will drive organisational efficiency, increase productivity and align accountabilities to the success of the organisation.
"Right-sizing will be implemented across all levels of the organisation and will be done on a performance-based review and individual job assessment against business-critical requirements.
"Priority will be on retaining the most productive employees with focus on maintaining key talent."
The airline added it was committed to providing training opportunities for staff to grow within the organisation.
"Gulf Air's main objective in the restructuring process is to reduce its losses through various cost-cutting measures across its business functions while improving yield and increasing revenue," it said.
"The plan will result in cost savings of 24pc by the end of 2013.
"In addition, further strategic initiatives have been developed that will reduce costs and improve financial results in 2014 and beyond.
"Revenue per Available Seat Kilometre (ASK) will increase by 9pc in 2013 through improved revenue management and sales, frequency adjustments and route cancellations."
Eight "commercially unviable" routes have already been cut as part of the plan.
"Gulf Air will strengthen its Middle East and North Africa (Mena) operations to ensure that its core customer base is served more effectively and efficiently while taking appropriate measures to reduce losses," said the airline.
"Gulf Air's realigned network will continue to operate to destinations in the Middle East, Europe, Far East and India offering flexible and multiple flight options while maintaining strategic links with selected European, Far East and Indian subcontinent markets.
"The realignment of the network will allow the airline to use its fleet and resources in the most efficient way in Mena markets by moving away from low-yield transit traffic and concentrating on high-demand and high-yield point-to-point routes to connect Bahraini businesses with regional markets."
The airline believes the restructuring process will help ensure Gulf Air continues to hold a leading position in the Middle East.
Efficiency
"The airline, known for achieving the highest on-time performance in the region, will continue to maintain and improve its operational efficiency and reliability," it said.
The airline plans to simplify its fleet by operating a mix of wide and narrow body aircraft with one of the youngest fleets in the region (4.3 years).
"It will continue to offer its hallmark Arabian hospitality accompanied by its award winning customer service and leading on-time-performance reinforcing its position as the region's most family and business friendly airline," it said.
To ensure government funding is utilised effectively, Shaikh Khalid will hold monthly board meetings. "Gulf Air will continue to operate with high-standards of international corporate governance and is committed to transparency," said the airline.
"The airline is committed to keeping its stakeholders fully informed as each major milestone of this strategic programme is achieved.
"The three-year transition programme will leave Gulf Air in a stronger position to meet future challenges.
"It will create a dynamic, commercially sustainable business better positioned to meet its future challenges."
Meanwhile, the Gulf Air Trade Union (GATU) and National Trade Union of Gulf Air jointly criticised the plan.
"We have already given our response to them which was clear and short," said GATU spokesman Mohammad Mahdi.
"We outright reject the proposed plans and so has the other union."
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