From the Gulf Daily News (Bahrain, today 17/03)
Massive bid to rescue Gulf Air
By INDIRA CHAND
A massive rescue operation is being launched to save Gulf Air from crisis. It includes sweeping management changes, jobs cuts and restructuring throughout the company, sources have revealed.
A BD60 million cash injection agreed by owning states last summer will only be paid if the restructuring plan goes ahead, chairman Shaikh Hamdan bin Mubarak Al Nahyan says in a memo to managers.
Without it, the airline faces insolvency he warns.
US-based consultancy firm Simet Hellielson & Eicher (SH&E) has been appointed to spearhead the rescue.
President and chief executive Ibrahim Al Hamer has agreed to stay on "for as long as necessary", says Shaikh Hamdan.
He said the board had accepted the SH&E plan, which includes where necessary "appointing interim managers and this will include an interim ceo (chief executive officer)".
"We are entering a crucial period that will be a challenge for all of us," says the memo.
"There is no time to lose. What we do, how we do it and who does it will be critical to our success.
"Some of you will have jobs which will change, some of you will be redeployed and some of you will lose your jobs.
"No longer can anyone, regardless of whether or not he or she is a Gulf national or an expatriate, see a job with Gulf Air as a job for life."
Gulf Air officials confirmed that the memo had been issued, but said a statement would be issued later.
Gulf Air board backs huge rescue plan
By INDIRA CHAND
GULF AIR can and will be saved, chairman Shaikh Hamdan bin Mubarak Al Nahyan has declared. But a massive rescue operation, including management changes, jobs cuts and restructuring throughout the company, must be implemented rapidly, he says.
US-based consultancy Simet Hellielson and Eicher (SH&E) has been appointed by the Gulf Air board to lead the restructuring plan.
Its proposals have been given full mandate by the board, Shaikh Hamdan says in a memo presented at a meeting between SH&E representatives and all Gulf Air managers, held on March 12 at Gulf Air Club.
Shaikh Hamdan was not present but his memo was presented by a representative of SH&E, said sources.
"You will know that for some time we have been facing a growing set of challenges, not the least of these our inability to generate sufficient earnings to fund our continued operation," says the memo.
"This position was worsened by the terrible events of September 11 last year, but we cannot hide behind that as the main cause of our problems."
Last summer, the company board agreed to inject BD60 million, divided equally among the four owning states, says the memo.
At the same time it was agreed to appoint a firm of consultants to:
* Recommend immediate actions to stabilise the Gulf Air position;
* Present options for restructuring to secure Gulf Air's long-term viability;
* Review Gulf Air's route structure, schedules and fleet;
* Audit Gulf Air's operations;
* Complete a financial review of the company;
* Review the three-year Recovery Plan and Strategy 2002-2004 and develop an appropriate restructuring Business Plan; and
* Assess the capabilities, experience and expertise of the existing senior management.
The memo says the airline appointed the "highly-respected" aviation consultancy firm SH&E, which started work in September and presented its proposals to the board last month.
"We have fully accepted their recommendations. SH&E has now been given a mandate by the board to lead the implementation of the Restructuring Plan and to provide support to management in achieving this," says the memo.
"Where SH&E consider it necessary, they will appoint interim managers, and this will include an interim ceo (chief executive officer)."
Shaikh Hamdan stresses four key points in his memo:
1) Without a further substantial injection of funds from the owner states, Gulf Air will become insolvent.
2) The owners have pledged their financial support but only if the Restructuring Plan is implemented.
3) To do nothing is not an option.
4) It is the role of management to make changes and SH&E have committed to support their efforts.
"Many other bad habits will also have to change; promotion and advancement in the company will be based on merit only," says the memo.
"Our network, products and services must reflect the needs of our customers above all others."
Success will enable the company to have the kind of future it wants, says the memo.
"If we succeed and, with everyone's commitment we will, Gulf Air will be able to invest in new aircraft, improved products, better training, proper management, succession planning and performance-related pay," it says.
"We can have the future we all want, but we will have to earn it by our own efforts, our competitors and the prevailing economic circumstances will ensure that.
"The board and I want to see Gulf Air become a centre of excellence, attracting the most able people as employees, a company in which you all can be justifiably proud and an airline to which our customers are attracted."
The airline has served the region for over 50 years but "we cannot turn to our past for our future success", says the memo.
"The board and I recognise that without the unqualified support of the people in this room we cannot turn this airline around and for that you have our gratitude in anticipation," it says.
"On a personal note, I would like to thank PCE (president and chief executive) Ibrahim Al Hamer for agreeing to stay to help with the transition for as long as necessary."