The speech of the chairman of the Board of Directors Nasser Lozi was distributed to the shareholders and included a review about the most notable achievements of 2008. It noticed that RJ’s performance in all operational aspects improved in 2008 despite the major challenges which it successfully overcame during the year. Among the challenges, there were massive, unprecedented rises in jet fuel prices, in addition to the drop in the demand on travel in the last quarter of last year, as a result of the global economic crisis and the events in Thailand and India.

In his speech, Lozi had also said that the company's operating revenues went up to around JOD703 million, an increase of 29% over 2007. This was achieved as a result of the rise in the number of passengers, which amounted to 2.701 million, marking an increase of 14.1% over 2007. Yield per passenger also rose by 11% due to the rise in ticket prices, which followed the increase in fuel prices during 2008. RJ's fuel bill reached around JOD285 million in 2008, compared to JD165 million in 2007.

He pointed out that in keeping with the best international airline practices, the company resorted to fuel hedging deals in order to protect the airline's financial position and protect it against fluctuation in the bottom line. RJ hedged 35% of the fuel forecast for consumption in 2008 and 2009 at an average price of JOD105 per barrel, at a time when the price was JOD100 to JOD150 per barrel. All indications at the time were that the prices would continue to rise, to reach around JOD170-JOD200 per barrel.

Lozi’s speech stressed that the price variations in fuel purchases in 2008 were absorbed, and the company realised a net profit of JD18.7 million before tax.
It added that due to the rapid and unexpected decline in oil prices – reaching as low as JOD45 a barrel by the end of 2008 – this year's fuel hedging contracts were revaluated and unrealized losses of around JOD46.7 million were recorded.
According to Lozi, the company, being consistent in its accounting policies and in conformity with the International Accounting Standards requirements, reflected these losses on the 2008 results. As such, the net losses of 2008 after tax, that the company announced, amounted to JOD23.4 million.

He emphasized that the company's operational results during 2008 were consistent with the growing indicators of operational performance during the past four years. However, during these four years, the airline logged net profits despite the various challenges and obstacles it faced in the region, like wars and unstable conditions in Iraq, Palestine and Lebanon. All these and other events had a negative impact on air traffic and the performance of Royal Jordanian.

At the end of his speech, Lozi expressed appreciation for the shareholders’ support and confidence in the leading national company, and conviction that a prosperous future lies ahead for Royal Jordanian. RJ's clear mission, huge potential and efficient human and technological resources have secured it a very good reputation and placed it among the best world airlines.

RJ president/CEO Samer Majali explained that the global economic crisis shall directly affect the performance of the international air transport industry in 2009 and see a decrease in the volumes of passenger traffic and cargo. Nevertheless, the airline took a number of measures to reduce the impact of this crisis on the company's performance, among which endeavoring to increase the number of passengers, opening new, promising markets and intensifying marketing activities on its network.

(c) Centre for Asia Pacific Aviation. Date posted: 17-Apr-09