MUSCAT, 19 June 2005 — Oman Air, the national carrier of Oman, is trying to increase its paid up capital to 50 million rials ($130 million) by the beginning of next year.
The airline successfully launched two new routes to New Delhi and Hyderabad in India in the beginning of this month, which are running to near full capacity both ways.
“The addition of these new flights is part of the expansion plans of Oman Air in which we are hoping to peg losses and show a profit of around 2 million rials by the year-end,” said Oman Air CEO Abdul Rahman Al-Busaidy, who was present in Hyderabad and New Delhi recently to attend the grand functions held to commemorate the launch of the new flights.
The CEO said that Oman Air was established as a company 20 years ago with a paid up capital of only 3 million rials with which three divisions were created. But over the years the company made profits of around 12.5 million rials.
“We are hoping to be able to raise the paid up capital to 50 million rials in the beginning of next year. And for this we will begin by showing a profit of three years,” Al-Busaidy said.
The soft loan of 10 million rials provided by the government is expected to give a new further impetus to the efforts of the company.
“This loan is interest-free and is payable after five years in 10 equal installments but within these five years if other shareholders agree to raise the capital then this 10 million rials will be converted into capital,” disclosed Al-Busaidy.
“And we have a facility where we can get around 20 million rials of unsecured loans from local banks because they are so pleased with our performance over the last three years,” he added.
He pointed out that the performance of the airline has to be viewed in light of the steep increase in the price of jet fuel, which constitutes a major component of the airline‚s costs. Average jet fuel price for the company‚s network has risen by 30 per cent.
“The sharp rise in the cost of fuel has affected most of the airlines, despite that we made a profit of around 600,000 rials in 2004 but the fuel impact was 3 million rials. So there could have been a profit of 3.6 million,” Al-Busaidy noted.
In 2003, the company had posted a loss of 1.1 million rials.
He said presently, Oman Air is consolidating its position as a niche regional airline by catering to specific markets and doing better on these selected routes.
“Basically we are surrounded by airlines which keep doing the same things. They operate intercontinental, Far East, Europe and if we had to enter this same over crowded market we would not have been able to survive,” Al-Busaidy explained.
“So to survive among the giants we chose the specific markets and do better there by serving these routes well besides codesharing with other airlines,” he said.
