Arab airlines face $1bn blow

Arab airlines face losses of up to $1 billion this year as travel worldwide takes a nosedive in the wake of the terror attacks in the US and its aftermath.

The gloomy profit warning for the flag carriers of 16 Arab countries from the head of the Arab Civil Aviation Commission came as airlines throughout the region launched a series of measures to stave off the worst affects of the global crisis.

Abdeljawad Daoudi, head of the Arab Civil Aviation Commission, said Arab airlines relying heavily on tourism would be the worst affected by the losses.

"EgyptAir and Morocco's RAM are among firms that will be the worst hit while companies in other countries where tourism is not a main economic activity will be hit less," he said.

EgyptAir has already announced a 40 per cent cut in domestic airfares as part of its efforts to prop up the country's tourism industry and fill its aircraft.

Similar promotions, sharp reductions in flight schedules and aircraft fleets and job cuts are some of the measures that airlines in the region are implementing along with other international airlines to counteract the adverse impact of the US attacks and the Afghanistan war.

The airlines are also facing sharply increased insurance charges and security costs, adding to the burden on them.

Bahrain-headquartered Gulf Air, which is owned by Bahrain, Abu Dhabi, Oman and Qatar, has introduced a new timetable with effect from October 8 slashing its flights by 15 per cent.

It has also announced plans to cut its fleet from 30 to 26 aircraft next year and begun laying off cabin crew after what its chief executive Ibrahim Al Hamer said were "below break even levels" results in the first two weeks of October.

Al Hamer reported a 20.4 per cent decline in passengers carried, 10.4 per cent drop in seat factor and 25.6 per cent plunge in revenue passenger kilometres.

Gulf Air has appointed international consultants Simat Helliesen and Eichner to conduct a thorough review of the airline's operations and recommend a restructure to restore profitability.

Dubai-based Emirates Airline which announced reductions in flights to 11 destinations worldwide immediately after the September 11 attacks, has said it was continuing its group-wide cost cutting programme.

It has frozen recruitment and given unpaid leave to some personnel as part of the programme but Emirates has ruled out staff redundancies.

The airline has also launched a number of special promotions in association with Dubai hotels to encourage more traffic.

Kuwait Airways has also reduced its flight schedule cancelling several flights including some to key routes of London and Mumbai (Bombay).

Public relations manager Adel Buresli said the airline was cutting the number of flights "due to rise in operational costs and world events".

Morocco's RAM has said it expected losses next year to swell to at least 750 million dirhams ($65 million) following the implementation of emergency measures such as an increase in fares and a freeze of investment plans.

The North African country expects tourism receipts to slow considerably in the last four months of the year with a drop of up to 20 per cent in the number of foreign tourist arrivals.

Turkish Airlines has said that it was axing more than 1,000 employees and planned to halve its fleet after traffic plunged 35.6 per cent following the September 11 attacks.

The airline said it planned to withdraw 12 planes from service next year and a further 18 in 2003.

International airlines operating in the region have also reported sharp downturns with British Airways reporting a 22 per cent slump in traffic since the attacks.

British carrier Virgin Atlantic has put off plans to launch a new Dubai flight while American carrier Delta has suspended its recently introduced Dubai service and now says it hopes to resume the flight in March next year. Troubled European carrier Swissair has also cut its scheduled operations in the region.

Worldwide, several influential industry figures and airline analysts have predicted major airline bankruptcies ahead saying the current downturn "was worse than that during the 1990-1991 Gulf War".