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French Version

Royal Jordanian: Connecting the world

Despite the current bad lot for the aviation business in the Middle East due to political deterioration in the occupied Palestinian territories

Despite the current bad lot for the aviation business in the Middle East due to political deterioration in the occupied Palestinian territories, Royal Jordanian (RJ) is one company that is striving to steer an upward course.

Regional aviation companies have already pointed out that their businesses are likely to plummet because of Israeli aggression. Among these are Lebanon's Middle East Airlines (MEA) and the Israeli El Al.

While MEA launched a new strategy to cut expected losses for this year, Israeli sources suggested their airline will slip into the red with a loss of around $50 million, almost half of what El Al made in 1999.

Royal Jordanian, on the other hand, sustained its profits despite a shrinkage in travelers. His Majesty King Abdallah reiterated last week the carrier should become more transparent and develop greater dialogue with the government to assess the latest efforts at privatizing RJ, a move registered last February at the Ministry of Trade and Industry.

The King's remarks focused on making RJ the principle choice for Jordanian, Arab and international passengers. And this is what RJ's administration is trying to achieve, bearing in mind the airline covers 47 destinations worldwide.

Samer Al Majali, CEO and president of RJ, says the Jordanian carrier will soon pursue a new national master plan to rejuvenate its business regionally and internationally. He noted the airline is in an upbeat mood, despite the financial hardship and difficulties it has faced since the political unrest began more than 11 months ago.

"The carrier has a commitment towards its customers. And this should be fulfilled through cost-efficient and competent policies," Al Majali said last week in a press conference. "We need to promote the carrier's image among the people, especially Jordanians who are the company's wealth..." Indeed, RJ's flights have faced tough competition from international airlines who are also chasing passengers for their planes.

Statistics show passenger bookings on Jordan's sole carrier are steadily increasing. In the year 2000, the number rose by 2.5 percent to 1.3 million, up from 1.25 million and 1.2 million in 1999 and 1998 respectively.

Al Majali noted RJ's debt is almost paid back. Since the carrier went under an intensive restructuring plan, conducted by the government in 1999, it succeeded in clearing JD 680 million from its accounts, about JD 320 million of which were in accumulative losses.

Thus, the company's profits began to register in 1998, making $30 million that year. In 1999, it made $28 million. However, the profits went down to a mere 1 million in the year 2000 because of the political unrest in the region.

Al Majali says the consequences of the 1991 Gulf War still affect the carrier's flight network around the world. The airline's losses during the war were estimated at JD 80 million, while the resultant losses were $110 million.

The restructuring plan centers on ways to rationalize annual expenditures. For the year 2001, Al Majali said the records show the performance was fair and acceptable despite the fact that thousands of bookings were canceled in the first half of this year.

"Since the Intifada began in September 2000, RJ passengers declined by 20 percent and 70,000 bookings were canceled, forcing the company to lose more than $12 million in revenue," he added.

RJ's restructuring plan also emphasizes its over-employment. Records show RJ's 3500 employees, including the administrative staff, receive $21 million in annual wages. Al Majali stated his carrier will consider steps to improve its personnel and reorganize the regulative structure to cope with changes in international aviation.

"We are currently monitoring the overall performance of the carrier, including its personnel and the procedures that have been implemented," Al Majali explained. He noted RJ reached an agreement with a local consulting company specialized in regulative structuring, to make a case study and recommendations for the carrier's performance as a whole.

"We decided to choose a company that has nothing to do with the aviation business. This will help us to have a non-biased, objective vision for the future structuring of RJ performance." Part of the RJ privatization focused on converting the carrier's five main departments into affiliated companies, so they could be sold profitably to international aviation companies. So far, the Catering Dept and the Free Market Dept were sold, while the US-based Boeing Co is expected to purchase the Training Center soon. RJ is also having the Maintenance Dept and Engineering Dept put on sale within the next few months.

RJ is working hard to refurbish its fleet of aircraft. The carrier has plans to replace its current 14 Airbuses with modern ones. Among the choices available are the Boeing 777 or Airbus 340 planes. "We are looking for airplanes that consume less energy and perform better for long-distance and non-stop flights." About half of the current flights are chartered, operated to serve part of RJ's destinations. These flights are costing the carrier $30 million a year. The carrier pays another $30 million each year for eight other aircraft, which will be owned by RJ completely within the coming three or four years. Al Majali said the carrier is also discussing plans to increase its destinations around the globe, including destinations in South America and Australia.

"Our primary goal is to attain the full satisfaction of our Jordanian customers. This means we need to take every possible step to make RJ's theme of connecting the world's continents a dream come true."

Ghassan Joha
The Star

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