Royal Jordanian sees $39m Q1 loss on oil prices

CEO Hussein Dabbas says fuel accounts for about 40% of the carrier's operating cost
Royal Jordanian sees $39m Q1 loss on oil prices
A Royal Jordanian plane.
By Bloomberg
Mon 23 May 2011 08:06 PM

Royal Jordanian Airlines, the first Middle East airline to order Boeing’s 787 Dreamliner, had a $39m first-quarter loss because of high oil prices, CEO Hussein Dabbas said on Monday.

The price of oil is “already too high,” Dabbas told reporters. “Our budget is based on $85 a barrel and that’s why we incurred a first-quarter loss,” he said.

Fuel accounts for about 40 percent of the carrier’s operating cost, Dabbas said. Crude oil for July delivery traded at $97.15 a barrel on the New York Mercantile Exchange. Prices are up 39 percent from a year ago.

Royal Jordanian also suffered from the unrest that has swept the Middle East, the CEO said. The year will be “challenging,” and the carrier expects to make up for the losses incurred in the first three months of the year from increased traffic during the summer season, Dabbas said. He said he hopes the company will break even this year.

Royal Jordanian will start receiving its first 787 aircraft in the first quarter of 2014, with Chicago-based Boeing delivering five Dreamliners that year, two to three in 2015 to 2016, and one in 2017, Dabbas said.

The airline, which operates 32 aircraft, committed to add 11 Boeing 787 Dreamliners, to fly to New York, Chicago, Detroit and Toronto. The airline’s first plane is the 85th on the production line of the aircraft manufacturer.

Boeing has postponed 787 deliveries seven times, resulting in a three-year delay, after grappling with new materials and production systems required for the world’s first composite airliner. The first Dreamliner is now due for handover to All Nippon Airways by September.

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