Oman Air Plans Major Aircraft Order Even as Break-Even Delayed

(Bloomberg) -- Oman Air Transport plans to move ahead with a multi-billion dollar order for wide-body jets early next year even though it won’t now break even in 2017 as the low oil price curbs growth in the Persian Gulf.

The carrier is now aiming to end losses by the end of next year, contingent on demand not deteriorating further, Chief Executive Officer Paul Gregorowitsch said in an interview on Tuesday. While the Mideast carrier will also delay plans to expand to a fleet of 70 aircraft and 75 destinations to 2023 from 2020, it still plans to order 15 new wide-body jets needed to replace older planes and add capacity, he said.

Further discussions will be held with manufacturers and leasing firms next week as Oman Air seeks to agree terms to take either Airbus SE’s A350 or the Boeing Co. 787-9. The U.S. model has a slight advantage because the carrier already operates six Dreamliners, with the tally set to increase to 10 in 2018.

Oman Air will also go ahead with deliveries of the 20 Boeing 737 Max planes it has on order as it leases out some of its current narrow-body fleet to better match seats to demand. While the carrier is continuing to operate 10 Airbus A330s, which form the core of its wide-body operations, those planes will be retired to make way for the new aircraft. Gregorowitsch said the upgraded A330neo isn’t of interest.

Aid Ended

While Oman Air remains unprofitable, the state-owned carrier is no longer getting government funding, having received $50 million last year and $300 million in 2014 when the CEO took over. The loss per passenger was cut by $10 last year and should decrease again in 2017, he said.

Even with expansion more tentative, Oman Air has still added Nairobi and Manchester to its network this year, according to Gregorowitsch. Peshawar on the Pakistan-Afghanistan border could follow before the end of 2017, and addition next year include Hong Kong, Seoul and a city in South Africa, he said.

More routes to mainland China are on hold after the company began flying to Guangzhou in 2016. It’s shelved plans for its own services to Turkey, relying instead on an agreement with Turkish Airlines. Oman Air’s German flights are now operated as code-shares with Deutsche Lufthansa AG and the European giant is among candidates for a joint-venture partnership, Gregorowitsch said.

To contact the reporter on this story: Christopher Jasper in London at cjasper@bloomberg.net.

To contact the editor responsible for this story: Chris Reiter at creiter2@bloomberg.net.