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Airline Finance News - Africa / Middle East.

New York, Geneva (AirGuideBusiness - Airline Finance News Africa / Middle East) May 20, 2012

Gulf Air Gulf Air's future hangs in the balance. Sources from Bahrain have confirmed that the KingdomOs lower house of parliament has rejected a proposed bailout plan presented by the airline, worth $1.75 billion and referred the matter to the upper house of parliament for moderation and mediation. The KingdomOs government has committed itself to see the airline survive, but with several options on the table, there is no sure way of telling the outcome, now that the funding is being decided by the two houses of parliament and largely out of governmentOs hands. According to one source sparks must have been flying when the lower house deliberated on the airlineOs performance, which earlier in the year, after less than three months of operations to Entebbe, pulled out of Uganda as part of a major cost cutting program aimed to concentrate on routes making profit, as seen to neighboring Kenya where the carrier now flies daily. According to the reports, members of the parliamentary committee discussing Gulf AirOs bailout threw a range of accusations against the airlineOs top management for allegedly squandering money, with some going as far as demanding stronger measures to be used to establish if any questionable transactions have taken place, while demanding changes at the helm of the airline. Gulf Air over the past two years, has not only suffered from the industry challenges of the upheavals of the global economy, but was hit hard through what has often been described as externally sponsored unrest, aimed to overthrow the monarchy with the equally often suggested motive to replace it with a theocracy instead. Passenger numbers subsequently shrank for both flights to Bahrain, as well as for transit traffic, leading to the implementation of an austerity package and wide ranging cost cutting exercise earlier in the year. Only days ago Gulf and equally challenged Royal Jordanian announce a major code share deal for up to 11 flights between Bahrain and Amman, but almost instantly drew criticism from aviation analysts over the supposed benefits of this deal for both airlines, unless seen as a precursor to a potentially far greater partnership, under which significant synergy effects could contribute to improved bottom line performances of the two airlines [ETH] something both governments would warmly welcome in order to reduce subsidies. Interesting here is that prior to his move to Gulf Air in 2009 did CEO Samer Majali serve as CEO at Royal Jordanian and their current CEO Hussain Dabbas is set to also leave for a top position with IATA next month, leaving the implementation of the deal to his successor. Aviation watchers are now on edge to see the next round of talks in parliament in Bahrain, to find out what fate awaits Gulf Air, which is THE pan-Gulf carrier, that has over the past two decades reduced in function to be the national airline of the Kingdom of Bahrain, after all other partner states progressively pulled out to establish their own national airlines. May 16, 2012

Oman Air Oman Air revenues up 35 percent. Oman Air saw revenues increase by 35 per cent to $809 million last year. But higher fuel costs and other expenses saw the carrier post losses. Oman Air's move towards long-term profitability continued apace and while the company has reported a loss of $286m during the year, the results were impacted by 38pc increase in fuel price which alone increased the expenditure by $93m. But for this steep increase in fuel price, the loss for the year would have been lower compared with the previous year which is a significant achievement, especially considering the fact that the airline deployed significant increase of 21 per cent in the capacity across the network. The airline reported improved yields and seat factors despite higher capacity. The company carried out a company-wide compensation study and increased staff salaries to bring it in line with the industry and offset increase in cost of living. "The company continues with its initiative towards the Omanisation process within its various departments and activities, including technical and higher management positions," said chairman Darwish bin Ismail Al Balushi. "The losses are part of the growth model for the airline and represent investment by the government to build Oman Air to a size where it would be a profitable entity. "Oman Air with its capacity increase contributes significantly to the non-oil economic growth and tourism for Oman. "The capacity expansion has also created jobs and more importantly learning and employment opportunities for pilots, engineers and airport operations." "Last year was one of both change and consolidation for Oman Air," he added. "We have continued our programme of rapid expansion, introduced new aircraft and further enhanced the quality of our products and services. "We have also invested in training, agreed a number of partnerships and joint ventures and taken a series of measures to improve efficiency." Source: May 15, 2012

South African Airways South African Airways Outlines New Growth Strategy. South African Airways will maintain its growth strategy and will not follow other airlines that are laying off employees, Siza Mzimela, the airlineOs CEO, told attendees at the Indaba travel trade show in Durban, South Africa, on Monday, May 14. She noted that Qantas has cut jobs, American Airlines is in bankruptcy and Lufthansa posted a loss. A number of airlines have pulled out of South Africa, she said, and the airline industry is under extreme pressure, with many industry veterans saying it has not been this bad in 30 or 40 years. SAA has seen an increase in fuel costs amounting to $2.6 billion, Mzimela noted, but fuel is only part of the cost increases that are plaguing the airlineOs bottom line. The airline is seeing increased costs in air traffic management, airport user fees and services such as catering. African airlines operate under an additional handicap, she said, because their revenues are in weaker currencies, but their costs are in dollars or euros. Airline industry profits also are projected to fall further in 2012. To partially balance the negatives, Mzimela said SAA has a strong economic impact on South Africa, providing 227,000 jobs, constituting 1.7 percent of the work force and providing 2.2 percent of GDP. The airline also drives the tourism industry, which accounts for 343,000 jobs and 3.1 percent of GDP. Mzimela became SAAOs chief executive two years ago as all airlines were struggling to cope with the effects of the global financial crisis. But in spite of the acknowledged difficulty of the time, she said, the airline has continued to implement its growth strategy. The airline has instituted a number of new routes, as well as product enhancements, customer service improvements, environmental initiatives and a fleet expansion. In the last year SAA introduced new routes to Kigali, Rwanda; Pointe-Noire, Congo; Ndola, Zambia; Cotonou, Benin; as well as a new nonstop from Johannesburg to Beijing. The latter addition fits into the airlineOs strategy to make Johannesburg not only the major airline hub of Southern Africa but a major international hub as well. Brazilians who want to travel to Beijing could fly through Johannesburg instead of Europe. Among SAAOs innovations recently introduced or in the works are new interior and seat designs in its new A330 aircraft, a new generation of in-flight entertainment system, mattresses to soften the fold-out flat seats in premium class, and Samsung tablets with movies and other entertainment options handed out to passengers on the smaller aircraft used on short-haul flights. SAAOs low-budget carrier, Mango, recently became the first airline in Africa to launch in-flight wireless Internet. In June SAA will inaugurate flights to Maun, Botswana, the gateway to the Okavango Delta, which is an increasingly in-demand safari destination. It took the airline four years to work through the bilateral agreements between the governments of Botswana and South Africa in order to gain the right to fly the route. Mzimela said she is proud that the airline recently achieved a four star Skytrax rating for the 10th straight year. It recently turned in its best on-time performance in 12 years, with 87 percent of flights on time. It is working on customer service improvements with a push in customer service training, a project aimed at correcting baggage problems, and an effort to enhance hubs and connection assistance at airports. The airline also is taking steps to take environmental responsibility, participating in the IATA voluntary carbon offset project and taking action to achieve accurate carbon footprint reporting. The airlineOs growth strategy is being implemented by increasing service to current and new destinations; investing in new aircraft; honing its yield management strategies; and building its cargo business. SAA recently put in a request for capitalization from its only stakeholder, the South African government. The request has not been well received by South Africans because it is being perceived as a bailout, which it is not, according to Todd Neuman, SAAOs executive vice president North America. OA bailout is when you request money to maintain existing services,O he said. OWeOre looking for an investment to expand.O May 14, 2012 1939-666X

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Publication:AirGuide Business
Geographic Code:7OMAN
Date:May 21, 2012
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