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Gulf Air is targeting a return to profit by 2012, according to its chief executive Samer Majali, chief executive officer of Gulf Air.
The former Royal Jordanian boss said the airline - which this year celebrates its 60th anniversary - was realigning itself as the primary regional carrier in the Middle East.
Majali - who was headhunted for the CEO role by Bahrain's sovereign wealth fund, Mumtalakat - said the company had to focus on product and value for money if it was to drag itself out of the financial doldrums.
Gulf Air was previously joint-owned by Bahrain, Oman, Qatar and Abu Dhabi. But all three emirates sold their interests in the business over a 15-year period, ending in 2004, to establish their own airlines. Gulf Air has not turned a profit since.
In an attempt to distinguish his strategy from those of his predecessors and of fellow Middle Eastern carriers, Majali said success would not be judged on speedy growth or a far-reaching network, but on whether or not the business made any money.
Should the strategy prove successful, he predicted the business will have moved back into the black in about two years time.
Unlike some other carriers in the region, Bahrain does not boast massive oil reserves and its Royal family will not support the airline with endless supplies of cash.
"We must make the airline commercially sustainable," he said.
"The airline has to be for the Kingdom of Bahrain but without needing its constant financial support.
"The strategies put in place previously did not cope.
"It is not enough only to take cost out of the business, revenue is also vital."
He said the airline's short-haul network would be expanded over the next five years and along with its six long-haul destinations - including a thrice-daily service to London - the network would be operated with a combination of narrow-body aircraft and regional jets.
"Long haul gives you the lowest yield and the highest cost," said Majali.
He said up to 15 of Gulf's least profitable routes would be ditched while frequencies on the strongest routes would be increased.
"Some people don't like closing a route. Some people base success on continuing expansion. But it makes no business sense.
"At the moment Shanghai does not make much sense for us. Big planes only make sense if you can fill them."
Majali said constant changes at the airline over recent years had left staff demotivated. He said he was holding talks at all levels to improve morale, but would not rule out redundancies as part of a cost-restructuring programme.