Bahraini flag carrier Gulf Air last week signaled a major shift in its fleet plans, affecting orders with both Boeing and Airbus. The airline has already signed so-called amendment agreements with the manufacturers “to reduce long-term liability and meet future strategic needs.”

Gulf Air said negotiations with the airframers date back to last year, as high fuel prices, a general slump in air traffic and so-called regional developments forced the airline to suspend service to a number of destinations in a bid to preserve its ongoing viability.

According to Gulf Air, the revised agreement with Airbus ultimately allows the conversion of an existing widebody obligation–namely, 14 of an order for 20 A330-300s placed in 2008–into an order for eight A320-family jets, all of which schedules call for delivery by year-end, as well as up to sixteen A320neo-family aircraft expected to join the airline’s fleet as either replacement and/or growth vehicles for its current single-aisle fleet in the “latter part” of the decade.

The revised Boeing agreement allows the airline to reduce its 787 Dreamliner deliveries from 24 to between 12 and 16, depending on the airline’s future needs. Plans call for the 787s to arrive in Bahrain toward the end of the decade and replace Gulf Air’s current widebody fleet of 10 Airbus A330-200s.

“As long-standing trade partners, Airbus and Boeing have understood our challenges and I am delighted that we have arrived at mutually agreeable solutions in line with the government directive to put the airline firmly on a path towards sustainability,” said Gulf Air CEO Samer Majali.

The Gulf Air chief added that the order revisions will cut the airline’s long-term financial liability by more than half, or some $5 billion.

Now flying a fleet of 38 aircraft to 48 cities in 30 countries, Gulf Air maintains a strong position in the Middle East market but has expressed a desire to develop a “targeted, more focused international network,” aligned with the Kingdom’s ‘Vision 2030’ economic blueprint.

The Gulf Air revelations surfaced as rival gulf-region carrier Qatar Airways took delivery of the Middle East’s first Boeing 787. The airplane arrived in Doha on November 14, some two months later than the date the airline had hoped to start Dreamliner services to London. It now plans to launch service to London Heathrow next month, following introductory flights to Dubai to give crewmembers experience in revenue operations.