Jordan needs to support its airline like other nations, CEO says

  • RJ CEO says its survival depends on covering pandemic losses
  • Airline among few in region that state did not help
  • RJ evaluating offers to lease new planes

AMMAN, Dec 22 (Reuters) - Jordan risks the collapse of state airline Royal Jordanian unless it offers financial assistance as other countries have done for carriers, its chief executive said on Wednesday.

"Every single airline got assistance from their governments except us," CEO Samer Majali told Reuters.

"The government has been reluctant to provide the assistance because of the huge burden on the budget," said Majali, who returned to his role in April after a 12-year hiatus to steer the carrier through the pandemic, having weathered regional upheavals for more than 50 years.

The only financial aid Royal Jordanian had received was a 50 million dinar ($71 million) cash injection last year, approved long before the pandemic, Majali said.

"Half-baked and temporary, patchwork solutions will not work. Either there is a serious investment in RJ or the airline has no chance of survival," he added.

Services to most of its destinations have resumed, setting the airline - which contributes indirectly more than $1 billion to the economy - on course to slash its losses by 55% this year and break-even in 2023, Majali said. But investment was needed.

"What is required now is an investment in the airline ... But a decision has to be taken soon," Majali said.

He said some 70% of the company's 250 million dinars ($350 million) of accumulated debt stemmed from having to ground its fleet last year.

Profitable before the pandemic, it was the first Arab airline to be privatised in 2007, though the government later regained a majority stake via a series of capital raisings.

Majali said the government had retrieved most of the financial aid it had given the company in 20 years from lucrative privatization proceeds that went to state coffers.

It pays around 70 million dinars annually to the state in taxes, fees and concessions, Majali said.

The airline has put in place a five-year recovery plan to increase destinations to 60 from a current 35 and modernise its fleet. It issued a request for proposals last October for 30 narrow-bodied and regional jets to replace its current 17 planes in that category, Majali said.

This was at the heart of a strategy to turn the airline into a hub for the Levant region by expanding its regional network amid forecasts of booming air passenger demand in the Middle East in the next few years.

It is evaluating offers from leasing firms and engine manufacturers, Majali added.

($1 = 0.7080 Jordanian dinars)

Reporting by Suleiman Al-Khalidi; Editing by David Holmes

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