Gulf Air restructuring paying off

Gulf Air reported BD25.5 million ($67.62m) in cost savings last year, following the adoption of several restructuring initiatives. The new business strategy implemented since 2010 has yielded positive results in terms of cost-control, cost-efficiency, expenditure reduction and manpower optimisation. Gulf Air registered savings of BD6.8m between January and May and is setting a 15 per cent target for cost reduction this year. "I am glad to report that our several restructuring initiatives aimed to reduce costs have helped us reduce our operating losses, achieve cost efficiencies without affecting the quality of our products, services offering and customer service," said chief executive Samer Majali. "Despite a very difficult 2011 caused by the regional geo-political situation and higher fuel prices that have severely impacted our business, we were able to achieve this," he added. "We used this difficult period as an opportunity to focus internally on reviewing our functions such as operations, services, products, fleet maintenance, fuel savings, contract negotiations and manpower optimisation. "We applied tighter control over expenditure and implemented cost-control measures, higher asset productivity and more streamlined processes," he said. He outlined a new action plan and renewed the airline's commitment to safety standards. "While we are pleased with what we have achieved so far, we have set a definitive action plan for 2012 to achieve a further 15pc reduction on our cost base this year and are aggressively pushing forward towards our target. "These measures are being taken while maintaining the highest levels of flight safety, schedule reliability and passenger convenience. "The credit goes to all my colleagues at every level and every department, who have been working together to achieve this," he said. Costs were reduced by 12 percent, while revenue of BD405m was generated in the last financial year. The airline credited the turnaround to diligent negotiations with suppliers on technical compensations, warranties, renegotiation of contracts, reduction in lease charges, disposal of engine scraps, aircraft weight management and changes in inflight products. A new fleet of A320 fitted with fuel-efficient and environment-friendly engines helped the carrier save fuel costs to the tune of BD1.4m. Insourcing of the fleet technical management services expected to yield an estimated annual net savings of BD5.4m was one of its major cost-cutting achievements this year. Despite the focus on reducing expenses, Gulf Air has introduced several new products and services since last year. A fully integrated entertainment "Sky Hub" was introduced in October, offering live TV, broadband hi-speed Internet and mobile phone services on board. Two fully renovated lounges were also opened in London and Bahrain. Gulf Air operates one of the youngest fleets in the region with an average age of 5.06 years, a result of its re-fleeting strategy. It has revamped its Falcon Flyer programme and launched many family and business friendly travel packages.