Gulf Air CEO says his job “is done”

James Hogan, Gulf Air’s CEO, hit back at rumours last month that his resignation was due to financial problems within the company.

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By  Barbara Cockburn Published  August 1, 2006

Hogan, who was put in charge of a three-year turnaround programme called Project Falcon, said the company was in a strong position and that he had completed his job of turning a loss making airline back into profit. He said: “Yes, it’s been strange. There’s been a lot of talk. But you know what, it’s quite simple. I’m leaving. My job is done.” However, senior sources predict the company is in financial difficulty following fuel costs rising to 33% and Abu Dhabi Government’s withdrawal to focus on Etihad. Gulf Air has further delayed publication of its 2005 annual results and the airline admits there will be losses. A London based aviation analyst, who asked not to be named, said: “Everyone is suggesting the future looks pretty dire for Gulf Air. Hogan himself predicted a year in the red.” Although Hogan managed to bring the loss making airline back into profit in 2004, most of the $4 million profit was derived from asset sales. Bahrain and Oman have injected US $264 million into the airline this year to help the company to expand. However sources believe this will be wiped out by rising fuel costs. Hogan told Arabian Business: “The fact is we’ve reduced the debt dramatically. But as you know, debt follows the number of aircraft. It’s just unfortunate the fuel wasn’t hedged.” The airline recently announced plans to inject $900 million to renew its nine ageing 767s, with a decision to be made between August and September. “Where are they going to get the money from to do this? Gulf Air will receive $75 million from a consortium of six banks payable over the next three years. To me this seems a fairly low number given the number of banks involved. Indication of the risk of the business?” said the analayst. He adds: “Hogan knows that there is only so much that can be done in terms of re-branding livery and better meals. But if they can’t get new planes, then there’s not much more he can do.” According to industry sources Hogan is expected to join Etihad after his departure. Hogan was unavailable to comment. Etihad refused to confirm or deny that Hogan would be joining the Abu Dhabi based airline. Abdul Aziz Jassim Kanoo, Gulf Air’s chairman, remains positive about the future. He said: “Project Falcon re-established Gulf Air as one of the world’s leading airline brands. “The new plan, Smart Airline, Successful Business, will take us to the next level of development, with investment in new aircraft, new maintenance facilities and new route and service initiatives.” Kanoo was unavailable to comment as to the financing of the expansion plan. Hogan told Aviation Business he would give an exclusive interview next month to divulge the situation further.

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