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Royal Jordanian still flying high

Jordan: Tuesday, April 08 - 2008 @ 11:07

At the assembly, the carrier reported 2007 net profits of JD24 million ($34.1m) before taxes, triple the profits registered in 2006. Total passengers transported rose 18% in 2007 to 2.4 million passengers against the previous year.

The company said the rise in the number of passengers led to an increase in operational revenues from JD447m in 2006 to JD543m last year, marking a 21.5% increase, and gross profit amounted to JD33m in 2007 against JD13m in 2006.

The carrier also said it had a ‘favourable outlook’ for 2008 based on rising passenger traffic.

Successful IPO

The general assembly was the company’s first since the Jordanian government sold 71% of the airline to international and local investors in an initial public offering in December 2007, raising $232m.

There was a great demand for the IPO from Jordanians, who now own 68% of the company’s shares – that figure includes the 29% retained by the government, 10% owned by the Social Security Corporation and the 7.7% granted to RJ’s employees. The remaining shares from that 68% are owned by Jordanian retail and institutional investors. The final 32% of the shares belong to Arab and foreign investors.

The carrier believes it was the most successful privatisation in Jordan’s history, both in terms of performance efficiency and the results achieved in the interest of all parties. The IPO also marks the first time that an first Arab state carrier has been privatised.

Another major accomplishment for the carrier in 2007 was joining the Oneworld airline alliance alongside nine giant international airlines. The carrier thus became the first and only Arab airline to join any of the three global airline alliances, allowing it to broaden its network of 55 directly served destinations to 700 served by the alliance airlines. Its membership in the alliance also secured many other privileges for its passengers.

Costs, however, have become a concern for the carrier due to the increase in the price of oil, which skyrocketed during the past two years. In 2007, RJ’s fuel bill was JD165m, compared to JD141m in 2006 and only JD67m in 2004. Now fuel cost represents over 33% of the total operating expense.

Samer Majali, deputy chairman and CEO of RJ, told Reuters that the company’s main challenge in 2008 will be to offset the impact of higher fuel prices. He said the company will try to absorb the increase by making its operations more efficient and boosting its revenue by carrying more passengers, adding that the carrier has hedged an undisclosed percentage of its fuel needs this year.

Strong start to 2008

So far in 2008, RJ is off to an impressive start, as it transported 169,000 passengers in February alone, a 22% increase over the same month last year, when it transported 140,000 passengers. The company noted that the increase was exceptional given that February is a winter month that usually experiences a decline in the number of passengers.

It attributed the increase to the overall improvement in air and ground services, the implementation of advanced IT systems in the fields of electronic ticketing, internet booking and self-service check in at the airports.

Departures and flying hours also witnessed an increase in February this year over last year. The airline operated 2,412 departures in February this year, marking an increase of 22%, and flying hours reached 7,147 in February, a 23% increase over February 2007. Transported freight also went up by the same rates.

The carrier, which operates 27 planes, is also continuing its fleet modernization program. On March 13 this year, the airline received its first Airbus A319 out of four which will join the fleet this year and the beginning of next year. Two Airbus A321s also will be assimilated in the fleet in April and May this year.

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Tuesday, April 8- 2008 @ 11:07 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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