Oman Air needs to 'shrink' before return to growth, CEO says

Airline aims to break even by 2027 as part of turnaround plan

Oman Air is carrying out a restructuring and recovery plan that outlines a return to breaking even by 2027. Getty Images

Oman Air is cutting unprofitable routes, simplifying its fleet, reducing costs and resizing its workforce as part of a turnaround plan to "fix foundations" before returning to growth, its chief executive has said.

The state-owned airline, which announced its first new route in five years with the launch of flights to Rome in December, aims to expand in 2025 through better aircraft utilisation and increasing flight frequencies, Con Korfiatis said during the Routes World conference in Bahrain.

The airline also aims to break even by 2027 as part of its restructuring plan that began at the end of last year, he said.

"If you're putting up a two-storey house, you build the foundations for a two-storey house, but over the years we became a five-storey house on the same foundation. So it's time to fix those foundations and then you can go back to growth," Mr Korfiatis said in an interview on the sidelines of the event.

Mr Korfiatis, who has 30 years of experience in the aviation industry, was appointed chief executive of the airline in May with the remit of steering the airline's transformation to turn its finances around.

A strong flag carrier is needed to help implement Oman's Vision 2040 plan to diversify its economy and reduce its reliance on oil revenue. Under that, the sultanate aims to increase the tourism sector’s contribution to 10 per cent of GDP and attract 11.7 million tourists by 2040.

The World Tourism and Travel Council (WTTC) forecasts that Oman's travel and tourism sector's contribution to the GDP in 2024 will exceed 3.3 billion Oman rials ($8.6 billion), or 7.6 per cent of the economy, up from 2.8 billion rials in 2023. The sector is projected to employ more than 206,000 people this year, up from 191,500 last year.

'Simplifying the fleet'

Oman Air currently has 42 planes in its fleet, with 32 of these flying. The 10 Airbus A330s removed from service include seven jets on short-term lease to Qatar Airways and three that are grounded before they are to be sold early next year, Mr Korfiatis said.

The airline currently operates 10 Boeing 787-9s and 22 Boeing 737s. It plans to shift to an all-Boeing 737 Max narrow-body fleet by the end of 2026, once it has phased out the older 737-800s and 737-900s as their leases expire, he said.

The airline expects delivery of five more 737 Max by mid-2025 and two 787s in the first half of next year. Another six 787 Dreamliners will join the fleet between 2026 and 2028. Of the 737 Max deliveries expected next year, some will be delayed by months but "Boeing is keeping us informed", Mr Korfiatis said.

The delivery should ideally coincide with the return of older versions of the aircraft to lessors, so "it's a bit of a balancing act when the Maxs are running some months late". The airline would consider extending some of the aircraft leases or entering into wet lease arrangements to cover any short-term gaps if they arise, he said.

Global airlines are grappling with delayed plane deliveries as Boeing deals with a safety and quality crisis, a union workers' strike and increased regulatory scrutiny of its production processes.

"From a commercial point of view, [delivery delays] don't help us, but the whole industry's eyes are open now, we see what's there and we roll with it until things stabilise – and they will eventually," Mr Korfiatis said.

The airline this year reduced its network capacity by 30 per cent, cutting unprofitable routes as part of restructuring efforts. The move was necessary "to stem the bleeding while we do the transformation work", he said. "Once we've stabilised that and we've put efficiencies in the organisation, we need to get our cost base down to where it needs to be, then we will have a platform to go back to growth."

The airline currently operates 42 routes, down from "the high 40s", as it halted some to Pakistan, India and Sri Lanka, Mr Korfiatis said.

"We will actually grow next year without increasing the fleet ... through some clever rescheduling we are able to do some more flying without increasing the number of aircraft. We can get more flying out of existing aircraft for both the narrow-bodies and wide-bodies," he said.

The airline has also removed its first-class offering and repurposed it to create the new Business Studio.

"The first-class product was flying an empty cabin and our business class was flying a full cabin, so it was clear that this is not a first-class market that we're in," the executive said.

"We've already seen results: instead of flying empty cabins, we're now getting people in the front [of the aircraft]."

The new route from Muscat to Rome starting in December will operate four times per week, with one-way fares from 75 rials. Oman Air is considering adding new routes in markets in the Middle East and Europe as early as 2026, Mr Korfiatis said, without providing further details.

Oman Air will next year join the Oneworld Alliance, which will help the airline increase its connectivity.

"Through the virtual network that you create through the alliance, you improve your network footprint substantially in a way that we could never do by ourselves," Mr Korfiatis said.