IMF urges national carrier to seek new shareholders

AMMAN – The International Monetary Fund (IMF) has advised authorities to seek new shareholders in addressing financial difficulties facing Royal Jordanian (RJ), the Kingdom's national flag carrier.

The IMF's mission to Jordan told officials it is important to engage RJ shareholders, and possibly seek new shareholders, to prevent any further government capital injection and to follow through on the restructuring of the airline.

The recommendations were made during discussions with officials last month to reach an agreement on the seventh and final review under the Stand-By Arrangement and proposal for Post-Programme Monitoring, according to an IMF report issued earlier this month. 

In April of this year, the government decided to inject JD50 million this year (an already budgeted amount) into RJ’s capital and is willing to consider injecting an additional JD50 million if other shareholders do not participate.

The Jordan Times tried to contact officials at the Finance Ministry and RJ to comment but they were not available. 

The injection of funds is part of a plan to restructure the national carrier capital that was approved by the general assembly in May. 

The restructuring of the capital was discussed during an extraordinary meeting on May 2, when it was decided to reduce it by JD37.9 million to offset part of the company’s accumulated losses at year end 2014. 

At the same time, the general assembly approved a capital increase by JD200 million shares/dinars, making the authorised share capital JD246.4 million shares/dinars. 

This is bound to cover the capital increase by allocating part to the Jordanian government or to 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, the RJ statement said. 

The government is the major shareholder with 26 per cent of the airline’s shares, followed by the Mint Trading Middle East Limited (19 per cent), the Social Security Corporation (10 per cent) and the Jordan Armed Forces-Arab Army (3 per cent), while the remaining shares are owned by other Jordanian and non-Jordanian companies and individuals.