Gulf Air reports strong performance for 2004

"While we are cognisant of the challenges of the fuel price as we approach the new year, there is much to celebrate at Gulf Air as 2004 draws to a close," he said. "This has been an exceptional year by anyone's standards. The initiatives in Project Falcon - our turnaround programme commenced in January 2003 - continue to bear fruit, with the result that today we are on a sound financial footing. Gulf Air is on track to report record passenger numbers and revenue for this year, while debt is at its lowest since 1989. Like all airlines worldwide, the record fuel price is hitting us hard with costs amounting to BD35 million (US$93 million) over our budget forecast for the year, but it has not diminished our determination and resolve to break even for the year."

Following the commencement of Project Falcon, other key performance indicators show growth in passenger traffic out of the three hubs of Abu Dhabi, Bahrain and Oman by 46 per cent, 36 per cent and 105 per cent respectively, while cargo revenue is up by 38 per cent and the seat factor by 3.8 points.

However with fuel costs presently running at 75 per cent over budget and an average fuel budget overrun of more than 42.5 per cent for the year, he admitted there was a measure of disappointment in the fact that this would prevent the airline from recording a healthy profit.

"While we are frustrated at not being in the black ahead of schedule, we recognize that rising fuel charges are just another hurdle to overcome and we will continue to look to the future and are constantly adjusting our business plan to manage the obstacles in our path to success."

Hogan pointed out that in recent weeks some of the major names in the aviation industry, as well as IATA had posted warnings about the negative impact the exceptionally high fuel prices would have on their respective businesses.

"We continue to revisit our business plan and restructure," he continued. "We will dispose of non-core assets and at the same time make the business decisions required to ensure that we adhere to our mandate to run Gulf Air on a commercial basis."

He added that investment in the Gulf Air brand, in its people, services and equipment will continue unabated, and as such the $10 million investment in new first and business seats is on schedule for roll out in February 2005.

"We will come through 2004, bruised but not bloodied thanks to the changes we have made over the past two years," says Hogan. "However, 2005 presents a totally new proposition. If fuel prices stay at the exceptionally high levels we have seen in 2004, we will have to consider additional measures to counter the cost overrun."

Urging responsible competitive practices, which are key to a sustainable healthy industry, he said the regions' airlines should act collectively in the introduction and sustained implementation of a suitable fuel surcharge, which would allow airlines to weather the storm.