The COVID-19 pandemic has exacerbated Royal Jordanian’s (RJ)
woes, despite the fact that the company had almost caught its breath in 2019
when it made profits exceeding JD10 million for the first time in a decade.
اضافة اعلان
In 2020, RJ had reverted to incurring losses after its
preliminary budget recorded losses of over JD150 million. The company, which is
considered the Kingdom’s primary national carrier, suffered these losses for a
number of reasons, the most important of which was the adverse effects of
COVID-19 on the aviation industry, particularly the almost complete halt in
flights to RJ’s 45 global destinations, for over three months.
The pandemic also temporarily ceased activities at airports,
including Queen Alia International Airport, which in turn curbed all RJ
activities by around 75 percent. There was also no reduction in RJ’s operating
expenses, estimated at around JD12 million, comprising salaries, social
security fees, and aircraft leasing costs.
Even though fuel alone constitutes more than 30 percent of
RJ’s high operating expenses, the national carrier has not taken advantage of
the 60 percent drop in international oil prices last year, following the
complete halt in air travel in Q2 2020.
The issue is not limited to operating costs. There is an
army of staff that work at RJ whose number, experts and studies agree, exceeds
the carrier’s actual needs by double. Some studies have noted that RJ only
needs around 800–1,200 of its 3,600 employees.
The third challenge is twofold. First, is the company’s poor
capital and second is aircraft rental expenses, some of which climb to around
$1.2 million per month. This issue requires reevaluation given the challenges
that the global aviation industry has faced, especially post-COVID-19.
Last week, the government decided to change most of RJ’s
board members as the majority shareholder in the company (80 percent of
shares). Prominent businessman Saeed Darwazeh has a vision for the national
carrier’s recovery and has the shareholder’s trust.
The new board of directors was assembled to face the
pandemic’s repercussions with a new action plan implemented by the new
administration, which will see the return of aviation expert and son of RJ’s
former president, Samer Al-Majali, to manage the company under the blessing and
full support of its new board.
The national carrier needs to address chronic structural
issues, most notably by tackling the administrative costs currently stretching
its budget, and fulfilling the need for staff with international technical and
operating expertise.
Then comes setting up aircraft rental contracts that would
reduce costs, fostering alliances with counterparts, and forging regional and
international regional coalitions to expand the number of destinations,
fulfilling RJ’s full potential and maximizing the advantages that result from
any of such alliances.
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