Royal Jordanian profit up on passenger traffic

PASSENGER GROWTH: Royal Jordanian said first quarter earnings rose 31% to $197.4 million.

Royal Jordanian (RJ), the first Arab state carrier to be privatised, said on Wednesday revenues rose 31% in the first quarter of 2008, driven by robust passenger traffic.

Chief Executive Samer Majali said operational revenues rose in the first quarter to 140 million dinars ($197.4 million) against 107 million dinars in the same period last year.

RJ reduced its net losses by 22% to 2.97 million dinars for the first quarter compared to the same period last year. The airline posts better revenues in the peak summer season, with passenger traffic substantially higher.

The airline's 2007 net profit rose 22% to 20.4 million dinars ($28.7 million) against the previous year.

Airline officials say the carrier's main challenge in 2008 was to offset the impact of higher fuel prices that now constituted around 40% of total expenses, up from a third in a typical year.

Energy importers like Jordan have been hit by a five-fold increase in oil prices during the last six years.

RJ saw a 17% rise in passenger traffic in the first quarter, while seat factor rose to 68% from 66%.

Last December the government sold 71% of the airline to international and local investors in an initial public offering (IPO).

RELATED: Royal Jordanian IPO raises $232mn

Foreign investors, including the Beirut-based investment firm controlled by the Mikati family, which acquired a 19% shareholding, now own at least 40% of the carrier's capital.

Local investors, including the government, which still retains a 29% stake, have a majority shareholding that exceeds 51% to ensure the carrier maintains its right to fly under bilateral accords.

RJ was able to expand its network of 55 directly served destinations to 700 as the only Arab airline in the international airline One World Alliance, which includes British Airways, American Airlines and Australia's Qantas.

The airline's strategy was to create Amman as a regional hub for the Levant region by expanding its regional network and tapping booming air passenger demand in the Middle East. (Reuters)

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