Royal Jordanian Retro Livery

Royal Jordanian Order, will it ever come?

A Royal Jordanian order of jets for the future has been discussed since 2019. Followers of the Middle Eastern carrier, Royal Jordanian Airlines, were not surprised with the recent releases about its fleet plan. However, with the financials of the company in dire straits and a large percentage of the work force still not receiving full salaries after the COVID-19 hit, many are doubting when the order will actually come.

The airline has been talking to everyone, from Airbus to Boeing for its narrow-body fleet and Bombardier (now with Airbus) to Embraer for  its regional jet fleet. The regional fleet of 4 Aircraft is expected to grow to beyond the 7 that it initially started with if the deal finally materializes. The narrow-body fleet is also expected to grow as Royal Jordanian plans new destinations. However, no plans have been released and adding 13 aircraft is being quoted.

The media savvy CEO of the Airline, Eng. Samer Al-Majali, was used to the Media in his first tenure of Royal Jordanian CEO career. This was over 10 years ago, to be sure and he has since took the top job at both Gulf Air and Saudi Gulf. But the brand power of Royal Jordanian is attractive and the media is quoting him and quoting him often. A Royal Jordanian order was welcome news when other carriers were talking about cancelations and delivery deferrals.

This is a pattern with the Jordanian carrier, that has tried to grow, but failed to find investors to finance growth in a region flooded by government backed airlines. Former CEO Stefan Pichler previously said that the Royal Jordanian order decision will be reached by the first Quarter of 2019. 

Mr. Majali came back with a different message that talks about the airline collapse soon, unless the government funds it. To the tune of $280 Million, no less. An airline that is about to collapse cannot be the same image of growth and prosperity that Mr. Majali is projecting. 

His inconsistency and his moving timelines could have probably worked with the old print media. Online, is a different game

Just last month he told Sam Chui that the airline will move to 45 airplanes and he expects a decision within two months. Having previously told flightglobal that this decision will come by the end of 2021. In December, he talked about adding 17 airplanes to the fleet and getting to 41 airplanes over the coming few years.

Who will pay for the order

In October Mr. Majali, an honoured guest in the IATA AGM, said that the airline

To pursue its growth plans, Royal Jordanian plans to raise between $150 million and $200m in bank loans to reinvest in the business, It will tap into the market when it reverses its equity loss of 200m Jordanian dinars ($282m) and is in talks with its government shareholder for non-cash support, including in the form of granting assets, which it expects to get within the “next few months”

However, the non-cash support did not come. The market will not be forgiving to an airline that has ate up the capital it was given many times over the years. A publicly listed company, Royal Jordanian will not be able to raise money in the market until manages to have a return on investment. According to publicly available data, the Airline was de-listed from the stock market in 2014, to be listed back in 2015 after a capital injection.

The stock market also de-listed the airline or suspended trading in its stock multiple times over the years, which shows that while the global airline industry suffered during COVID-19, Royal Jordanian has been struggling with profitability for a long time. An analysis of the 10 years pre-COVID-19 (2010-2019) showed that the Airline had lost 129 Million JOD (181 Million USD). Which is more than the capital of the Airline at the start of the 10-year period

Observers are not bewildered by the board decision to name a successor, so remotely different from his predecessor. Mr. Majali comes from a political family that has heads of parliament, and ministers in their midst. His own father was a Prime Minister and his political savvy is seen as the primary reason he is back in the CEO seat. His predecessor, Stephan Pichler came with a CV that included profitable airlines such as Lufthansa and Austrian in addition to Jazeera Airways and Fiji Airlines experience.

While his predecessor managed to be sometimes be profitable and focused on the bottom-line. His inability to navigate government circles and get the capital needed was seen as his demise. Mr. Majali, who is splurging on hiring budgets, in a bid to project confidence in the future and the certainty of growth. It will also help as the government is seeking solutions to its growing unemployment.

Better in-seat experience and a sharp reputation push are also being worked out but experts we spoke to say this may not be enough. Having previously sold many of the ancillary functions of the airline to prop up profitable years, Mr. Majali inherited a lean airline that has been competing with low cost carriers for years. However, it is not the government’s favorite investment avenue. 

When will the Royal Jordanian order come?

Sources close to the airline say that Mr. Majali is pushing for a Royal Jordanian order of airplanes to stabilize the image of the airline and assure suppliers and staff alike of the continued existence of the airline that is approaching its 60th birthday . However, lessors and manufacturers will look at financial statements and find difficulty in understanding where the airline intends to finance its growth plans. 

Time will tell if Royal Jordanian is capable to navigate the current storms in the region and those that were pandemic-induced. However, sources in leasing companies we spoke to insisted that the Royal Jordanian order is to not be expected soon and could possibly could be pushed to the second half of the year, if then. 

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