Royal Jordanian Airline to Privatize 100 Percent This Year

Published May 7th, 2000 - 02:00 GMT

National airline Royal Jordanian is actively looking for investors ahead of its full privatization this year, after a recovery in performance from a difficult period, its management says. 

In an interview with AFP, the airline's director-general and chairman, Nader Dahabi, said the company had "recently taken a series of measures to improve its performance ahead of the full privatization which should happen towards the end of this current year." 

These measures have resulted in Royal Jordanian (RJ) seeing "net profits in 1999 of 36 million dollars after years of losses, with the company's debts standing at around 150 million dollars by the time it is sold by the government, compared with more than a billion dollars in 1995." 

"We have already contacted international companies and some have expressed interest," Dahabi added without giving further details. 

He said "49 percent of RJ's shares will be sold to a strategic partner or to foreign investors and the rest will be held back for offer to Jordan's private sector." 

The government decided in October to privatize the company because it could not support it financially, Dahabi said, adding that it must first "change the law which defines RJ as a public institution," during a session of parliament. 

"Consultants including Arthur Andersen have mapped out a financial restructuring program ahead of the sale," Dahabi explained. 

In line with that, the government has paid 300 million dollars of RJ debt owed to the Jordanian Oil Refinery, which the state will recover when the sale of the airline goes through, he said. 

Furthermore, five departments of RJ will be hived off as separate companies and then sold off "before the end of the year," Dahabi said. 

Two departments have been ready since the end of April, including the training center, and should soon be put on the market, he continued. 

Part of the sale will go towards paying off the airline's debt in Jordan, which stands at 110 million dollars. 

He described the airline's improved performance, with increases in the first four months of this year of four percent in the number of flights to 4,500 and 12.6 percent in the number of flight hours to 19,553, compared with the same period in 1999. 

RJ has also cut costs, canceling non-profitable routes, including those to Canada and Iran, and merging with offices of neighboring countries, Dahabi said. 

There has been a cut in staff, without compulsory lay-offs, reducing the number to 4,500 from 5,500 in 1994, he said, adding that the hiving off of departments to make them independent companies will bring that figure down to 3,500 employees. 

RJ's fleet is made up exclusively of Airbus planes: nine A310s and three A320s, servicing a total of 45 destinations, including the United States, western Europe, the Middle and Far East and the Gulf. 

"The standardization of the fleet over the last few years has allowed RJ to save on maintenance costs," he said. 

Dahabi believes the future owners of the company "will keep on RJ's qualified personnel, whose salary levels are not high compared with other airlines, which means a guarantee that there will not be any layoffs." 

He described the full privatization of RJ as "a pioneering experiment in the region," and called on Arab airlines to "privatize and merge to be able to develop and take on international competition." -- AMMAN (AFP)  

 

© 2000 Al Bawaba (www.albawaba.com)

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