Royal Jordanian (RJ), the flag carrier of Jordan, plans to raise its capital by JD200 million ($281 million) through a rights issue in line with a strategic plan drawn to restructure the company.

The restructuring of the capital was discussed during the extraordinary meeting held today (May 2) where the members recommended its reduction by JD37.9 million to offset part of the company’s accumulated losses at 2014-end.

Over three phases, the authorized share capital will be increased to JD246.4 million ($346.6 million). This is bound to cover the capital increase by allocating part thereof to the Jordanian government and/or to the main shareholders that own more than 10 per cent of the shares and/or to other investors through public offering and/or private offering to the shareholders, as may be decided by the board of directors, said the national carrier in a statement.

Speaking at the ordinary and extraordinary meeting held at the Sheraton Hotel, Amman, chairman Suleiman Al Hafez underlined Royal Jordanian's strategic role as a national carrier that connects Jordan to the world through a modern fleet of aircraft, which offers the highest levels of safety and security and that covers many cities worldwide.

The airline, he stated, played a key role in the country’s economy, contributing three per cent to its GDP.

"Royal Jordanian is proud of its young fleet, which does not exceed five years of age, especially after introducing five Boeing 787s in the second half of 2014. This modernization process will be a positive turning point for us and the fleet renewal will reflect positively on the overall performance of the company," he remarked.

Hafez said as part of the restructuring plan, the airline had last year halted operations to Accra, Alexandria, Colombo, Milan, Al Ain, Mumbai, Lagos and New Delhi mainly due to their weak economic feasibility and for better investment in regions with better economics.

Owing to this move, the number of RJ stations have shrunk to 52 from 60, stated the chairman.

The ordinary meeting discussed the board’s report on the 2014 financial situation and the current business plan, in addition to the auditors’ report, the budget, profits and losses. The ordinary general assembly agreed to all these articles.

On the capital hike, Hafez said the board had decided to boost the capital in three phases; implementation of the first will start in 2015 and the increase will be by JD100 million; the capital will be increased by another JD100 million in the coming years throughout the period required to implement the restructuring plan (2015-2019).

He said the company has been facing challenges since 2011, stemming from the political and security conditions in the region.

This impacted the operations of some stations, leading to the suspension of flights to Tripoli, Benghazi, Misrata and Mosul, in addition to stopping services to Damascus and Aleppo since July 2012. Flights to Sanaa and Aden have been suspended since mid-February 2015, he added.-TradeArabia News Service