The Jordanian government is again preparing Royal Jordanian for its long-awaited privatisation and is confident the flag carrier will end 2007 at least partly privatised.
One of three financial institutions short-listed for the task - Merrill Lynch, Goldman Sachs and Citibank - will soon be instructed to place 74% of the government holding in the private sector. The government first prepared its national carrier for privatisation in 2001, but was forced to postpone the sale following the terrorist attacks in the USA and consequent downturn in traffic. However, it has since been able to dispose of non-core activities such as catering, engineering and training to finance debt, and has been able to improve its financial health, posting profits in the past two years.
According to chief executive Samer Majali, the privatisation is likely to be carried out in two phases, with a minority holding to be offered to financial institutions, before the remainder is made available in an initial public offering (IPO), most likely on the Amman stock exchange.
Majali expects the partial privatisation to be completed before the end of 2007. The Jordanian government will retain a 26% stake, but a majority of 51% must remain in Jordanian hands to ensure compliance is maintained with the country's bilateral air service treaty obligations.
Majali says the airline is also close to making a decision on a new long-haul fleet. Its four A340-300s and three A310-300s will be replaced with a single type, either the Boeing 787-8 or Airbus A350.
He also seeks to add about four Airbus A319s to Royal Jordanian's narrowbody fleet, which already consists of A320s and A321s. It recently took delivery of its first 100-seat Embraer 195, with one aircraft to arrive every two months until completion of an initial order for seven aircraft. The E-195 will be operated in a two-class configuration with 12 Crown Class and 88 economy-class seats, and will serve on local routes of one- to two-hours' flight time, including four destinations in Iraq.
The expansion of the regional network will enable the airline to play a full part in the oneworld alliance, which it will join in early 2007. Majali says Royal Jordanian may add a service to Budapest, to link with Malév, which will also become a oneworld member at the same time. Further in the future is a possible route to Montreal in Canada.
Its cargo division, which operates two Airbus A310 freighters, launched services to Beirut and Cairo in November. To facilitate the planned growth of the airline, and as part of the restructuring of the civil aviation sector, Amman's Queen Alia International airport is being offered to private investors on a 25-year build, operate and transfer basis, to include the building of a new terminal. Lead advisor of this project is the International Finance Corporation, a member of the World Bank Group. Six expressions of interest have been received.
Source: Airline Business
