Gulf Air continues policy of commercial transparency with publication of 2003 Annual Report

Gulf Air is one of the few airlines in the Middle East region to publish audited accounts to accepted international standards, and the 2003 Annual Report follows the formal implementation of its three-year recovery programme (Project Falcon) in December 2003.

In his review of the year, President and Chief Executive James Hogan reveals the airline carried a record six million passengers, recorded a reduction in losses amounting to 51 per cent, introduced a new corporate identity and a range of products and services that have made world news.

"The first year in our journey of change has also been acknowledged within the industry as one of the most difficult years in the 100-year history of aviation," he said. "Bankruptcy, downsizing, cutbacks and layoffs have been the order of the day. Apart from the depressed global economy and a jittery travel market, terrorism, rising fuel prices, regional conflicts and SARS have taken their cumulative toll within the industry creating a challenging backdrop against which to begin our restructuring programme.

"The fact is that despite all this Gulf Air took a quantum leap from the point of near closure to a new position of strength in the market. One year down the line, Gulf Air is a different airline."

In 2003, 590,000 more passengers flew with Gulf Air than in the previous year, a vote of confidence by anyone's standards. This is reflected in significantly improved key indicators with passenger revenue up 15 per cent, premium traffic on European routes up 23 per cent, frequent flyer recruitment quadrupled, cargo revenue up 20 per cent and unit costs down by nine per cent.

"I believe that just as we set out to do, we have surprised both our customers and our colleagues in the industry, many of whom it should be said, were deeply sceptical of any possibility of a successful turnaround," he added. "However the scope and momentum of change and innovation is evident, not only in Gulf Air's significantly improved financial position, but in the long list of achievements for the year 2003, and in the independent industry recognition with the Airline Turnaround of the Year Award presented by the Centre for Asia Pacific Aviation (CAPA) in 2003."

Further recognition of Gulf Air's achievements came more recently with the announcement that the airline won a Skytrax award in the Excellence in Quality Improvement category. It also won the award for the World's Best First Class Onboard Catering and came third in the Best First Class Lounge in the World category for its new lounge in the Kingdom of Bahrain. The airline was named second in the Best Business Class Lounge in the World category.

The annual report meanwhile shows that Gulf Air revealed its strongest financial results for four years, with a 12.1 per cent increase in revenues to BD384.6 million / US$1020.2 million (2002: BD343.0 million / US$ 909.8 million) and a 51 per cent reduction in net losses to BD19.9 million / US$ 52.8 million (2002: BD40.7 million / US$108.0 million).

Ahmed Al Hammadi, Vice-President - Finance for Gulf Air adds that everyone in the airline is committed to the creation of a sustainable commercial platform.

"Despite the obstacles placed in our way, we came through not just unscathed but significantly stronger. We will further develop and grow strong bilateral /commercial relationships and alliances with global and regional /GCC carriers so as to offer the customer more choices, while at the same time we will continue to deliver world-leading services along the road to profitability and growth," he said.

Other key data in the report includes 19.8 billion available seat kilometres (ASK) in 2003, up 16.5 per cent on 2002 (17.0 billion) while revenue passenger kilometres amounted to 13.5 billion, up 14.5 per cent on 2002 (11.8 billion).

"The hard work of past years is already reaping dividends on 2004 performance," adds Al Hammadi. "We are seeing year-on-year passenger growth of 35 per cent (first half 2004 versus same period in 2003) and we are confident of reaching our Project Falcon break-even target this year."

Al Hammadi warned that increased competition in the region and the significant increase in jet fuel prices would place additional pressure on the airline's performance.

"However, Gulf Air is one of the few airlines in the world to be turning in strong performances against the backdrop of these tough market conditions," he concluded. "With a continued commitment to innovation, coupled with among others, the highest levels of product and service quality and a strong network - all built on a strong commercial footing - this will enable us to soon regain our position of one of the world's leading airlines, and allow us to serve the Middle East region for many years to come."