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Royal Jordanian makes impressive turnaround from loss to profit in 2012

Mar 23, 2013 12:32 am

Skift Take

RJ’s success story of increased passenger traffic and decreased operation spend shows there’s still room for small players in a region populated with global dominators including Emirates and Qatar.

— Samantha Shankman

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An AV geek snaps a picture of Royal Jordanian Airlines while plane spotting at Chicago O'Hare Airport. Michael Miley / Flickr


Royal Jordanian, which marks its 50th anniversary on December 15, 2013, witnessed an impressive turnaround last year, posting remarkable financial results.

“The good growth in earnings and the relative decline in costs enabled the company to reverse the JD57.9 million net loss in 2011 into a JD1.1 million net profit in 2012,” RJ announced in its annual report to shareholders. RJ will be holding an ordinary general assembly meeting on March 28.

“Royal Jordanian is proud of the hard work, determination and loyalty of employees who were behind this major leap that was achieved in 2012 to surpass all the loss that was incurred in 2011 due to the regional events, high fuel prices and drop in tourism activity,” it said.

“Turning the loss into profit, though modest, is a reason to be happy,” the report further said.

According to the annual account, the seat factor went up from 70 per cent in 2011 to 73 per cent last year as the number of travellers increased by 6 per cent, from 3.2 million to 3.4 million passengers, even though the number of flights and flying hours remained unchanged, at 40,000 and 116,275, respectively.

Financially, the company achieved a JD79.2 million gross profit last year, 968 per cent higher than the JD7.4 million posted in 2011.

Total earnings amounted to JD802 million in 2012, marking a 9 per cent growth over the JD736 million recorded in the previous year.

One reason for RJ’s success is the fact that it lowered its operation expenditure by 1 per cent, making it JD722.8 million last year from JD728.6 million the year before.

The report indicated that the oil bill accounted for about 40 per cent of RJ’s overall operational costs despite the fact that hedging contracts covered around 31 per cent of total fuel purchases.

Commending employees for saving on energy consumption, the report gave the highest credit to pilots who “executed an ambitious programme that culminated in a JD10.3 million saving”.

“They capitalised on their experience and professionalism in managing flights and adhering to flight plans, besides other technical measures taken at the appropriate time,” the report noted.

RJ Board of Directors Chairman Nasser Lozi highlighted in the report the modernisation of the company’s fleet, which now stands at 33 planes.

He also indicated that the airline is planning to expand flights to the African continent while, at the same time, continuing to evaluate all 60 global destinations to determine their economic feasibility.

In the last two years, Royal Jordanian opened new routes to Berlin, Misrata, Libya, and, the most recent, Algiers. There are studies done on the possibility to open new routes during this year.

Lozi said in the report that RJ plans to raise its capital from JD84.3 million to JD184.3 million; the company is studying the mechanism and practical approach towards that end.

The government approved the increase in capital and to maintain its equity at 26 per cent.

Under future plans to optimise value and income, RJ is planning to tap other sources of revenue besides those generated from transporting passengers and air cargo. These include ground-handling services at other Arab airports, in addition to Queen Alia International Airport, and providing maintenance services to other airlines after the opening of RJ’s maintenance hangar.

(c)2013 the Jordan Times (Amman, Jordan). Distributed by MCT Information Services.

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