The RJ general assembly held its ordinary and extraordinary meeting on May 2 at the Sheraton Hotel, Amman, presided by the chairman of the RJ Board of directors Suleiman Al Hafez.
Attending were members of the board of directors and RJ President/CEO Captain Haitham Misto, in addition to the companies’ general comptroller Nidal Al Sader, auditors of RJ accounts Ernst and Young and some of the shareholders, whose entirety owns 63% of the company capital, which amounts to 84.3 million shares/dinars.
The ordinary meeting discussed the board’s report on the 2014 financial situation and the current business plan, in addition to the auditors’ report, the budget, profits and losses. The ordinary general assembly agreed to all these articles.
The restructuring of the capital was discussed during the extraordinary meeting; it was decided to reduce it by JD37.9 million to offset part of the company’s accumulated losses at yearend 2014. At the same time, the capital will be increased by JD200 million shares/dinars, making the authorized share capital JD246.4 million shares/dinars.
This is bound to cover the capital increase by allocating part thereof to the Jordanian government and/or to the main shareholders that own more than 10% of the shares and/or to other investors through public offering and/or private offering to the shareholders, as may be decided by the board of directors. The board is authorized to determine the share price and the phases of the increase, and to proceed with all necessary actions under applicable laws. The extraordinary general assembly agreed to all the aforementioned articles.
The extraordinary meeting also authorized the board of directors to proceed with all legal procedures related to the restructuring of the capital before official authorities or the suspension thereof, and discussed amending the company’s articles and memorandum of association to take into account the aforementioned changes in the company’s share capital.
Hafez said the board of directors decided that the increase will happen in three phases; implementation of the first will start in 2015 and the increase will be by JD100 million; the capital will be increased by another JD100 million in the coming years throughout the period required to implement the restructuring plan (2015-2019).
In his opening speech, which was distributed to the shareholders, Hafez said that RJ is a leading national company that occupies an advanced position in the regional and international air transport industry due to its highly professional technical, technological and human assets.
He also underlined its strategic role as a national carrier that connects Jordan to the world through a modern fleet of aircraft, which offers the highest levels of safety and security and that covers many cities worldwide.
He said that Royal Jordanian is proud of its young fleet, which does not exceed five years of age, especially after introducing five Boeing 787s in the second half of 2014. This modernization process will be a positive turning point for Royal Jordanian and that the fleet renewal will reflect positively on the overall performance of the company.
Hafez said that in light of the restructuring plan, the airline halted operations in 2014 to several destinations — Accra, Alexandria, Colombo, Milan, Al Ain, Mumbai, Lagos and Delhi — in light of their weak economic feasibility and in order to better invest in regions with better economics. This move reduced the number of RJ stations to 52 instead of 60.
According to Hafez, in 2014 the company has been facing challenges since 2011, stemming from the political and security conditions in the region. This impacted the operations of some stations, leading to the suspension of flights to Tripoli, Benghazi, Misrata and Mosul, in addition to stopping services to Damascus and Aleppo since July 2012. Flights to Sanaa and Aden have been suspended since mid-February 2015.
The security and political unrest has strongly been affecting the demand on travel and tourism to Jordan and the Arab world, he said. Also contributing to the losses RJ incurred over the past few years were the fuel prices, which were high until the first nine months of 2014, and the growing competition RJ is facing from giant carriers.
Hafez assured the shareholders that the government, in cooperation with the board of directors and the relevant parties, are endeavoring to restructure the airline’s finances, operations and administration, to enable it to bolster its competitive edge and maintain its strategic role in serving Jordan.
Royal Jordanian, he said, continues to support the national economy, contributing an average of 3% to the gross domestic product.
He said that the government recognizes the prominence of the highly symbolic national carrier, which plays a strategic role in connecting Jordan with the world. Due to these reasons, the government has always been supportive and thus been taking the necessary procedures, being the biggest shareholder in the company.
The airline studies on revenues, costs, network and fleet concluded that increasing revenues and cutting costs is crucial to developing the airline, according to Hafez.
To generate more revenues, the company is planning to increase its operational and non-operational revenues by capturing the available opportunities on the RJ route network to increase the number of passengers and to restore the upward curve of the market share.
Hafez stressed that the airline will keep on exerting efforts to increase revenues to the maximum using the same offered capacity, to boost non-operational revenues and work on the activities that yield the highest and fastest growing revenues, according to the plan for 2015-2019.
During the meeting, Chairman Suleiman Hafez and President/CEO Captain Misto responded to the shareholders’ questions about the airline’s performance and plans.