RJ President/CEO stresses need to intensify efforts to avoid effects of international economic crisis

At a workshop convened yesterday, with the participation of the RJ European stations area managers, Majali said that the airline is witnessing an increase in the number of passengers and that the company has registered remarkable growth of all operational indicators in the first ten months of this year, when compared to the same period 2007.

The seat factor increased from 71% to 73%, the number of passengers went up by 18% and the flight frequency by 14%. The flying hours and aircraft kilometers also grew by 15%, and the uplifted cargo marked an increase of 13%.

The president added that Royal Jordanian achieved these positive results despite the challenges posed by the high fuel prices during the last few months. He said that the fuel bill paid by RJ in the first ten months of 2008 reached to JD245m, against JD130m for the same period of 2007.

The fuel expenses constituted 43% of the total operational expenses, compared to 32% in the corresponding months of last year.

Majali said that the financial results of the company for the first nine months of this year, represented by a JD2m marginal net loss, are basically attributed to the losses in hedged fuel deals that RJ procured throughout 2008, in conformity with the best international practices in this regard. Through this policy, RJ aims to protect its financial position and reduce its financial volatility. Thus, the airline contracted to purchase about a third of its annual fuel consumption during 2008 and 2009, which is a balanced and cautious strategy to mitigate the effects of the increased jet fuel prices on the airline's financial results.

He added that as a requirement of the International Accounting Standards, RJ re-evaluated its fuel hedging deals at the end of the third quarter of this year, due to the dramatic and unexpected reduction of oil prices, which reached less than $50 a barrel in comparison to $147 a barrel last July. The company registered JD17m unrealized losses, leading to the aforementioned marginal loss. Majali pointed out that these unrealized losses are bound to fluctuate with the price of jet fuel.

He also called upon the participants who represent RJ in 18 European cities to intensify their promotional efforts, boost sales and use different tools to increase the RJ market share in the European continent. Europe operations make up 30% of the overall operations of the airline, occupying the second place among RJ operations, after North America.

Majali also mentioned the excellent features the company offers its passengers in the air and on ground, which make it easier for the area managers working in the outstations to attract more customers and boost revenues.

He stressed the management's ongoing keenness to improve the airline services and facilitate travel to increase revenues by following clear and robust policies to deal with the current economic crisis and protect the company's financial position.

This October saw high seat factor rates that reached 78%, as result of the successful policy.

RJ, Majali said, started realizing the effect of the world economic crisis on the operations of air cargo, which went down last month by 19% compared to the uplifted cargo in the same month in 2007. He expressed hope that this will not affect the passenger traffic in the coming period.

RJ Vice president/Marketing, Sales and Services Hussein Dabbas, Vice President/Network Management and Alliances Guido Ruther, Vice President/Cargo Ingo Roessler and a number of directors and employees dealing with the commercial affairs of the company participated in the workshop.