Release Date: 06 February 2007
Release ID: 1061
Chairman of the board of Royal Jordanian Nasser Lozi said that the most important issue the Board of Directors has been working on has been the privatization of the airline.
The privatization project, to be completed before the end of 2007, will be conducted in two phases. The first involves an evaluation of the company, advising the government on the best options for selling up to 74% of RJ shares to financial/strategic partners and to the Jordanian public through an initial public offering (IPO). The second will see the implementation of the government-sanctioned option. Phase one is expected to be completed within three months.
Lozi added that eight international investment banks, well experienced in aviation and airline-related transactions, were invited to submit technical and financial proposals for the project. Three banks submitted proposals: Merrill Lynch, Goldman Sachs and Citigroup consortiums. The proposals were thoroughly studied and evaluated by a specialized technical team, which eventually recommended having Citigroup lead this consortium of local and international partners.
The shares to be sold to non-Jordanian investors will not exceed 49%, Jordanians retaining not less than 51 % of the shares. The government will retain 26% during this phase, transferring RJ ownership from the public to the private sector.
In his opening speech at the 42nd RJ Annual Marketing & Sales Conference, convened on Feb. 5, 2007, which saw the participation of area managers of 52 stations and of general sales agents from 40 countries, Lozi said that another major step in the privatization process was the government’s decision to modernize and expand Queen Alia International Airport.
"The project will be conducted in two phases. The first will provide capacity for up to nine million annual passengers by the year 2010. The second phase, which is expected to witness actual traffic growth, will provide capacity for 12 million passengers annually. The project will be structured on the basis of a build operate and transfer (BOT) contract between the government and the future QAIA investor for a period of 25 years," said Lozi.
Over the past years, he said, the airline has set the foundation and the stage for the next steps on the way to implementing the overall strategy that His Majesty King Abdullah II and the government have laid out for RJ and the aviation sector in Jordan. A new vision has been set for the airline, making Amman a hub for the region. To attain this goal measures and procedures have been taken regarding the route network, the fleet, human resources and the IT systems.
Lozi extended the airline's thanks and appreciation to the previous board of RJ for all they achieved during their tenure. They have set the foundation for the airline's strategy, which includes adding new aircraft to the fleet, such as Airbus A319s and A321s, in addition to replacing the A340s and A310s with the long-range, wide-body Boeing 787-8 Dreamliner.
Moreover, a large number of by-laws and regulations that will facilitate the day-to-day business of the airline was approved for the purpose of developing and modernizing the company.
President/CEO Samer Majali reviewed the overall performance of the airline during 2006, and the fleet renewal that took place last year in order to cater for the network that will see new destinations on its map in 2007 and 2008, such as Montreal, Budapest, Ankara, Brussels, Casablanca and Algiers.
He mentioned that RJ was given two prizes for enjoying international reputation. Air Transport World (ATW), the leading monthly magazine covering the global airline industry, selected Royal Jordanian as the winner of the Phoenix Award, presented to airlines that have gone through a major transformation. Royal Jordanian also won the Merit Award for the Airline Turnaround of the Year 2006 at the 3rd Annual Asia Pacific and Middle East Aviation Outlook Summit, held by the Centre for Asia Pacific Aviation (CAPA) in Singapore. The award acknowledges the airline's successful turnaround and strong strategic contribution to the aviation industry.
Royal Jordanian is also the first Arab carrier to join any of the global airline alliances — oneworld. RJ will start offering oneworld services to its customers in April 1, 2007.
Majali said that after years of losses, Royal Jordanian managed to return to profitability, starting in 2004, despite the huge complexities that the air transport industry has faced, like the political instability in the region, new low-cost carriers entry and the skyrocketing fuel prices. He pointed out that the fuel bill the airline paid last year reached $197 million, against $142 million paid in 2005.
He tackled the internal airline developments in 2006, among which the gradual implementation of the e-ticketing system and the introduction of the new revenue management system.
RJ has made big strides in the Common Use of Self Service check in, the Internet booking engine, the frequent flyer program and the 24/7 Call Centre. Over and above, 2006 saw the conclusion of the medium-haul fleet modernization program, receiving six new Airbus A320s and A321s, and the delivery of the first of seven EMBRAER regional jets.
Vice President/Marketing, Sales and Services Hussein Dabbas presented to the participants the marketing and operational plan of the airline, for 2007, with a view to boosting the company's market share worldwide under the competitive situation in the air transportation industry. He mentioned that the plan focuses on opening new markets and reducing the operational cost.
Other aspects of the plan concentrate on upgrading the services offered passengers, creating sales and marketing tools, improving flights schedule and connectivity, and reducing sales costs through promoting the Internet booking engine platform, the e-ticketing and the interline e-ticketing, and connecting to one Contact Centre (the Call Centre).
Dabbas said that the marketing and operational plan aims at increasing the frequency of flights and better network connectivity. The new automated systems of e-ticketing, Internet booking and others will entail changing sales techniques of travel agents.
The one-day conference tackled the company's marketing and sales plan for 2007, and the outstations’ performance in 2006.
The participants also discussed the changes that will touch the work methods due to introducing the e-business and automated travel procedures, and, above all, entering the oneworld alliance.
On Feb. 4, the area managers attended a workshop to get familiarized with the changes and developments RJ is witnessing as it becomes member of the oneworld airline alliance.
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