'Oman Air to make profit in next 4-5 years’

Oman Monday 07/August/2023 21:15 PM
By: Times News Service
'Oman Air to make profit in next 4-5 years’

MUSCAT: A comprehensive plan to turn around the fortunes of Oman Air has begun following a report submitted by one of the leading global consultancy firms.

Eng. Said Hamoud Al Ma’awali, Minister of Transport, Communications and Information Technology and Chairman of the Board of Directors of Oman Air said: “The work has begun with the setting up of a ‘Transformation Office’ that will help in the execution of the goals set up for the airline.”

Detailing the new strategy that will help Oman Air become a profit-making airline, Al Ma’awali said, “We expect net profit in the next four-five years.”

The minister hoped the airline will breakeven in the next three to four years and post net profit a year after that.

Oman Air’s turnaround plans are based on the report submitted by Oliver Wyman, a global consultancy firm, which won the bid for the management consulting partner and was handed the work in April this year.

Al Ma’awali said: “We all know that Oman Air is currently having significant debts and one of the top priorities would be to reduce the debts that are more than desired. As part of the measures to bring out wholesome change and make Oman Air a successful airline, we received the report from Oliver Wyman in June.

“We have started the implementation of the proposed plans in the first week of July and as part of the immediate plans, there has been restructuring in the top-level and senior-level leadership.”

On Monday, Nasser Al Salmi was appointed as the Acting CEO of Oman Air replacing Abdul Aziz Al Raisi, a move the minister said was part of the restructuring process during the press conference at the Oman Air headquarters.

“Captain Salmi will be serving as an Acting CEO and within six months we hope to have a full-fledged CEO. Salmi would be one of the candidates for that position,” he said

Four focal points

Al Ma’awali said that the turnaround will be based on four major pillars and efforts will be made to ensure that they are implemented. “We have to do a lot of hard work to achieve success as the “Transformation Office” will have the best people to execute the plans.

“We will be hiring professionals and also ensure that the best human resources are retained to make Oman Air a competitive airline that aims to represent the Sultanate in the best manner.

“Aviation sector is an enabler and key to economic growth of the country and the four pillars which we will work on are: financial sustainability, human resources management, effective governance and financial efficiency.

“The transformation programme will accelerate the process of Oman Air’s turnaround which we hope to witness in the next three- four years.

“Lot of countries are doing a lot to accelerate the aviation sector with countries like India ordering thousands of new aircrafts. We have to be cautious and meet our initial target of building a financial efficiency to make Oman Air robust financially,” said Al Ma’awali.

The minister admitted that “at this stage Oman Air debts are significant and much more than desired” and one of the crucial initiatives would be to do “right sizing” of aircrafts hinting at halt of any purchase of new aircrafts.

On the concerns of employees being laid off under the new restructuring plan, Al Ma’awali said: “We would like to have the best professionals to deliver our plans. We will be hiring professionals in consultations with the hired management consultancy firm. Oliver Wyman will be working closely with the Transformation Office and they will receive a retainer fee and a success fee after the conclusion of the programme.

“The new plans are centered on employees and there have already been changes in top and senior levels.”

The minister said that drastic changes will be made but assured that the best employees will be retained and they will grow in the new environment.

Local aviation sector

Al Ma’awali said that Oman Air and Salam Air are in talks to enable the local consumers are benefited. “We want both the airlines to complement each other for the good of the domestic customers,” he said.

Al Ma’awali also announced the setting up of a new national aviation board

New national aviation board

The minister said that one centralised board will be announced on August 19 that will bring all the concerned aviation stakeholders under one umbrella.

The respective identity and legal status of the existing board of separate organisations will not be touched upon but a central aviation board (name of the board yet to be announced) will be announced on August 19.

“This is an important development in the new plan with some of the world’s best technocrats to be on the board. We will have four technocrats, including one Omani. These individuals have wealth of experience in their respective fields and have been picked as they are the best. The seven-member board will have a chairman and two government representatives. We hope the new board will ensure that the turnaround plans are properly executed.

On government’s subsidies to Oman Air, the minister clarified that the subsidies are to the aviation sector and this year, Oman Air may still need but from next year, under the new plan, reliance of subsidies will greatly reduce as “we aim to make Oman Air into a profit-making airlines in next four-five years.”

A successful turnaround as part of the national civil aviation strategy will be important to align with the goals of Oman Vision 2040, a roadmap for the country to diversify its economy and move away from an over-reliance on oil and gas before the year 2040.