Royal Jordanian's turnaround plan towards profitability, launched in the second half of 2017, started to show positive outcomes towards the end of last year as the airline achieved a JD468,000 ($658,022) net profit before tax.

At a recent press conference, RJ president/CEO Stefan Pichler highlighted that in the second half of 2017, the company's performance started to show remarkable progress after it took effective measures to increase bookings, launched a series of sales promotion campaigns to encourage customers to travel during the low seasons (fall and winter), and started implementing the five-year turnaround plan.

In the third quarter of 2017, the company witnessed great results and achieved a net profit of JD31.8 million ($44.7 million), covering the losses of the first half and enabling the company to register a JD5.4 million ($7.5 million) net profit in the first nine months.

Pichler said that the positive results were also due to the 15 per cent increase in the number of passengers and the 9 points increase in the load factor in the last quarter of 2017 that led to an annual increase of 7 per cent in the number of passengers and 5 points in the load factor, which reached an average of 71 per cent in comparison to the seat load factor in 2016, which was 66 per cent. Thus, revenues went up in 2017 by JD25 million ($35 million), to reach JD623 million ($875.9 million), a 4 per cent increase over the JD598 million ($840.8 million) revenues in 2016. The net operating profit rose to JD12 million ($16.8 million) in 2017 from JD5 million ($7 million) in 2016.  

First quarter results of 2018

Pichler said that most airlines usually record seasonal losses during the first quarter of a year, due to lower demand on travel and tourism, yet in 2018, RJ was able to cut those losses significantly due to a strong revenue performance.

Seasonal losses in Q1 were only JD13.8 million ($19.4 million), a significant improvement over the JD26.3 million ($36.9 million) losses recorded in the first quarter of 2017.  

Pichler added that this outstanding performance in the first quarter was the result of an increase in overall revenues, which reached JD143 million ($201 million), an increase of JD16.6 million ($23.3 million) over the estimated budget and JD16.9 million ($23.7 million) over the first quarter of 2017.

Revenues in all business segments witnessed a noticeable surge; revenues from passengers sales went up by 13 per cent, cargo sales revenues by 18 per cent, cargo warehouse revenues by 46 per cent and online ticket sales revenues by 73 per cent, he said. The revenues attained from the RJ-owned Tikram Airport Services Co. increased by 28 per cent.

On the operational side, Pichler said that 744,000 passengers flew on board RJ planes in the first three months of 2018, against 698,000 passengers in the same period of 2017, a 7 per cent increase compared to last year.

He stressed that the turnaround plan projects are being implemented and the company's different operational and commercial departments are witnessing great progress.

The five-year turnaround plan, which runs until 2022, encompasses major initiatives that are expected to enhance unit revenues by 7 per cent and lower unit costs by 6 per cent, he said, adding that it focuses on RJ’s product, in addition to the innovative electronic travel services that will facilitate all travel procedures and enhance revenues.

Pichler added that the turnaround plan is also reviewing RJ’s business portfolio, the activities of some "hidden champions", such as the loyalty programme Royal Plus, Royal Tours and Tikram Airports Services Company, which, along other programs, "have to be developed much further to become valuable assets for our company".

He expressed optimism for 2018, saying that the first quarter of this year has seen a remarkable growth above the same period in 2017. This, again, was driven by a much stronger commercial performance.

RJ now has stronger connectivity at its home airport in Amman, and that makes possible more network sales. Also, the marketing activities are now much more retail focused and follow an aggressive pricing strategy.

Regarding the route network and the fleet, Pichler said that the turnaround plan also includes opening three international destinations, Washington, Stockholm and Copenhagen, the latter beginning of June. Eight destinations on RJ’s route network are still suspended due to security instability: Damascus, Aleppo, Mosul, Tripoli, Benghazi, Misrata, Sana and Aden.

The five-year turnaround plan entails modernising the medium- and short-haul airliners and introducing four new aircraft if necessary. RJ will study the options before taking the decision concerning the choice of aircraft, to maintain its efficiency and reduce maintenance and operating costs. - TradeArabia News Service