Strategic Growth Plans Envisaged For Oman Air
Date: 14 April 2009
- Oman Air capital raised from RO 50 million to RO 300 million.
- Ground Handling and Catering Business generates positive returns.
- 23, 194 flights, and 3.916 million passengers handled during 2008.
- 3.210 million Meals catered to airlines at Muscat International Airport last year.
- Oman Air Plans to add 27% capacity, 41% more flights and carries 43% more passengers in 2009.
- 2008 loss due to fuel price increase and expansion plans.
The Oman Air extraordinary general meeting and annual general meeting held on April 12th brought to focus the long-term strategic expansion plan intended for the airline as well as the capital raise brought in by the government of Oman.
HE Ahmed Bin Abdulnabi Macki, Minister of National Economy, Deputy Chairman of Financial Affairs & Energy Resources Council and the Chairman of Oman Air Board, announced that the capital of Oman Air has been raised to RO 300 million from RO 50 million. "The step aims at enhancing the operational and technical potentials and capabilities of the company to enable it to provide world-class service to passengers." Macki said.
The minister also brought to light the reasons for the RO 42 million loss of 2008 as compared to the RO 4.020 million profit in 2007 and stated that the reasons for this was due to the fuel price increase (in the first half of 2008) that alone accounted for 42% of the loss. "The loss also resulted from the expansion operations that included purchasing new planes, operating new international routes, raising the employees' salaries and improving the support services for the planes in a bid to compete with other companies operating in the world travel market.", the Minister added.
In his report, the Minister has also said that airline business is capital intensive and extremely competitive. "New routes especially long haul routes take a few years to mature before they start yielding positive returns. While the airline is expected to be self-sufficient and profitable only in the long run, it will continue to generate significant economic value to the nation in the interim as Oman Air will be a great brand ambassador for the Sultanate will promote tourism and provide impetus to the commerce between Oman and its trading partners around the world. Besides Oman Air will also generate vast employment opportunities for the nationals in many spheres. Decision to promote and develop Oman Air is thus a strategic decision.
While the falling oil prices will be a major relief for the airlines, the decline in top line revenues will more than offset the resultant savings. In the region, with the steep build-up in capacity at least in the recent past, supply may outstrip the demand, at least in the near future. Fortunately, our domestic economy, though not immune, is not very much affected by the current crisis. Our robust banking regulations, emphasis on the highest standards of transparency and good corporate governance have resulted in a stable business environment." Minister's report reads.
Oman Air’s Chief Executive Officer Peter Hill in his report had highlighted that there was a 20% increase in the staff strength in mainly operational areas and the coming years will see numbers continuing to rise to cope with the Company's planned expansion.
Development of a master plan to provide for a new Head Quarters Building plus associated structures to house General Training, Flight Stimulator and Cabin Crew Training Centre as well as staff accommodation, recreational and social facilities, and a clinic and welfare centre, provision of a new engineering facility, purpose built to Oman Air's requirement that will provide a four bay aircraft hangar and associated workshops which the Company hopes to develop into a Maintenance Repair and Overhaul Facility (MRO) capable of undertaking profitable third party work and a proposed formation of its own Destination Management Division that will act as a natural extension to Oman Air's network and provide a range of ground services and leisure products in Oman, were some of the salient points that Hill had mentioned in his report.