Gulf Air restructuring may lead to renegotiated plane orders

In the telephone interview with Reuters, Samer Majali said the company would "honour the terms of the contract" with manufacturers but may negotiate amending airplane numbers and sizes.

He said: "In light of our new network we will be engaging our manufacturers in discussions. Potentially, there will be discussions around (amending existing orders) if we come up with a fleet requirement that is vastly different than the current order books."

Gulf Arab airlines were among the world’s fastest growing with Dubai-based Emirates, Qatar Airways and Abu Dhabi's Etihad Airways spending billions of dollars on new aircraft orders , towards establishing themselves as regional hubs between East and West. To take advantage of a large expatriate population, low-cost airlines such as Air Arabia and Jazeera Airways have added to the competition.

Majali said passenger numbers were down 3% in the first seven months of 2009, while yields were 15-20% lower, compared with the same period last year and that Gulf Air might even be open to merging with other airlines. With capacity deployment "very tight", he hopes to achieve results close to last year's in the second half. He said: "Yields are still quite low and I'm not sure anything, globally speaking, has put major brakes on yields."

Yields show the average revenue gained per mile per passenger and are of great interest to the airline industry.

He said that in terms of cutting costs, the airline will look at "some route closures", while also launching new ones, in addition to "accelerating the retirement of the older aeroplanes and the introduction of the new ones" with any staff cuts dependent on the size of the airline after restructuring.

Regarding plans to sell shares in Gulf Air in an initial public offering - first announced in 2007 - he said, "The plan now is to commercialise the airline. There is no decision on an IPO at the moment."