RJ reduces accumulated losses, increases capital

AMMAN — Royal Jordanian (RJ) held an extraordinary general assembly virtually on Tuesday, headed by RJ Board of Directors Chairman Said Darwazeh. 

In the meeting, the general assembly decided to decrease the capital from 324,610,470 shares/dinars to 123,627,470 shares/dinars through amortising JD200.983 million from the balance of the accumulated losses amounting to JD385.157 million, by reducing the company’s capital to become the authorised and subscribed capital (123,627,470) shares/dinars. 

Also, the capital decrease will be executed through amortising the value of the mandatory reserve amounting to JD14.808 million from the total accumulated losses, so that its value after amortisation becomes JD385.157 million, according to a statement from the national carrier. 

The general assembly also decided to increase the company’s capital by 240,000,000 shares/dinars; so the authorised and subscribed capital becomes 363,627,470 shares/dinars, through covering the increase in the company’s capital by capitalising 70,000,000 shares/dinars to the Government of Jordan/Government Investments Management Company, through payments under the company’s capital increase account shown in the company’s financial statements as of December 31, 2022. 

The company will cover the remainder of the capital increase of 170,000,000 shares/dinars through the Royal Jordanian Company owning 90 per cent of the capital of the Jordan Airports Company, provided that the fair value is paid by raising the capital of the Royal Jordanian Company through the issuance of new shares in the company's capital with a total value of 170,000,000 shares/dinars in favour of the shareholder, the Government Investments Management Company.

In his opening speech, Darwazeh said that RJ has been implementing a new strategy that has boosted its endeavour to project Jordan as a tourist destination and make Amman a gateway to the region, and, based on it, the company has further enhanced its product to better meet passengers' needs. 

Darwazeh added that RJ, helped by continuous government efforts, is using all its resources to progress and emerge stronger from the crisis and the effects of the financial losses caused by the pandemic. 

In 2020 and 2021, the company recorded net losses amounting to JD235 million, in addition to the losses recorded by the company during the first quarter of 2022 due to the spread of the Omicron virus, and after that the Russian-Ukrainian crisis, which led to a steep rise in fuel prices in global markets. 

In 2022, fuel prices went up by 69 per cent and RJ had to pay the difference, which was a major reason for the loss. Despite the accumulated losses that exceeded 100 per cent of its capital, the company did not write off the entire capital, but settled for writing off 62 per cent of the capital in order to reach an acceptable ratio of accumulated losses to the capital, the statement said.

RJ Vice Chairman/CEO Samer Majali said that the government recognises the highly symbolic nature of the national carrier, which plays a strategic role in connecting Jordan with the world.

He added that the restructuring of the company’s capital will help it modernise its fleet of aircraft and work in line with its strategic plan to increase its fleet size to 41. 

The airline has reached contracts to introduce new Airbus A320neo aircraft to serve medium-haul flights in the Middle East, the Arabian Gulf, North Africa and Europe, and introduce new generation Embraer aircraft for regional routes. The first two E2s will join the fleet in mid-December this year. The airline will resume the modernisation plan for its fleet at the beginning of 2026, the statement said.