The Royal Jordanian General Assembly held its ordinary and extraordinary meetings on April 26th at InterContinental Hotel, Amman, presided by the Board of Directors Chairman Said Darwazeh.
Attending were Board of Directors members, Royal Jordanian President and CEO Stefan Pichler, the companies’ general controller, accounts auditors Ernst and Young and some shareholders; the latter, in their entirety, own 92% of the company capital, which amounts to 246.4 million shares.
The ordinary meeting discussed the Board’s report on the 2017 financial results and the business perspectives for 2018, in addition to the auditors’ report, the budget, profits and losses. The ordinary General Assembly agreed to all the articles under discussion.
During the extraordinary meeting, held directly after the ordinary meeting, the shareholders approved the increase of authorized capital by 28.2 million shares to become 274.6 million shares. The additional capital increase will be offered through a private placement to the Government’s Contributions Company at a par value of JD1/share with a discount of 610 fils/share, i.e. 390 fils/share. The amendments on the establishment contract and the bylaws of the company were also approved to reflect the mentioned capital increase.
Board of Directors Chairman Said Darwazeh explained that the 28.2 million share capital increase is part of a previously approved plan, assuring that this increase in capital will not lower the number of the shareholders’ shares by any means, and the new capital will reflect positively on the airline’s future and improve its financial situation.
In his speech, which was distributed to the shareholders, Darwazeh, presented the financial figures for 2017 and stressed that the company achieved positive results: the net profit before tax of JD468 thousand after a very weak first half year, might not be significant, but which reflects the effectiveness of the turnaround plan towards profitability implemented in the second half of 2017. This net profit is the first positive outcome of the 5-year turnaround plan implemented by RJ.
He highlighted the significance of this result, when compared to the net losses incurred in the first six months of 2017, which amounted JD26.3 million due to commercial challenges and the decrease in ticket prices due to fierce competition, increased capacity in the regional markets and operating costs that grew by 3% because of the 28% rise in fuel prices which could not be compensated in the ticket prices.
Darwazeh said that RJ is now moving in the right direction, and has a clear strategic plan for the next five years that is being implemented in a smart manner which enables a restructuring of the company and sustainable profits, just as expected by the shareholders.
He stressed that the Board of Directors fully supports and trusts the President and the management team to make this transformation and translate RJ’s business plan into reality.
Royal Jordanian is seeking to strengthen its contribution to the national economy and to connecting Jordan to the world, thus serving the kingdom and its citizens, and supporting tourism, trade, investment and exports.
Darwazeh praised the government’s support and keenness to reposition RJ, this national company, in a place befitting its position as the national carrier, under the guidance of the Royal Hashemite leadership.
He also thanked the shareholders for their support and understanding of the situation the company has been going through over the past years and expressed appreciation for RJ’s staff and the airline’s loyal passengers, stressing that Royal Jordanian will always be a national icon that supports the economy of Jordan.
President and CEO Stefan Pichler explained how the airline was able to stage a strong recovery after a weak start in the fiscal year 2017. At the end of the first five months of last year, the airline had very weak revenues, which were on the verge of “dropping even further into the operating loss zone this year”, but that the commercial performance recovered considerably and the load factor performance was significantly enhanced while stabilizing the fares in the second half of the year.
He said that the revenue management, the sales and marketing strategies were completely changed in order to attract new customers for the airline, and “that worked very well”. So, the recovery in the second half of the year was the fruit of a strong revenue performance across the network, noting that the airline achieved a positive operating cash flow of JD22.8 million in 2017.
Pichler thanked the Government of Jordan, the Chairman and Members of the Board of Directors, for their continuous support. Without the Board as a critical and supportive partner, the management would not have been able to start and execute the turnaround plan for RJ, said Pichler.
He also stressed that the management is committed to delivering sustainable profitable results in the years to come, as well as a reliable product and customer experience for all passengers.
He said that in the corporate brand of Royal Jordanian, “we carry the most powerful and unifying symbol in Jordan: the Crown”, which makes it” the ultimate obligation to take the company to a brighter future under the wise guidance and leadership of His Majesty King Abdullah II”.
During the meeting, Darwazeh and Pichler responded to shareholders’ questions about the airline’s performance and plans.