A suggestion ‘to rescue RJ’

Reading Prime Minister Hani Mulki’s statement regarding integrity and protection of public wealth prompted me to write about an issue of interest to all Jordanians.

Royal Jordanian Airlines (RJ) is a public asset that was partially privatised. The government owns 60 per cent, the Social Security Corporation 10 per cent, and several foreign and Jordanian investors 30 per cent of its shares.

There are some structural and administrative problems at RJ, as demonstrated by the losses registered every year, while other Arab and international airlines are making profits and being successful in a market that does not know borders, and RJ and its shareholders are paying the price, neither registering profits nor fulfilling the goal of improving the airline and turning it into a distinguished international carrier working in a very competitive sector.

The shareholders’ conflict of interests is the main reason for the problems faced by the airline, which rents planes from an Arab investor for very high prices, even though it has been revealed that they are old and in need of very costly repairs.

There are “strong” rumours that the former government had pledged to purchase the Arab investor’s portion, 15 per cent, at a very high price that exceeds RJ’s stock price at the Amman Stock Exchange.

If these rumours prove true, the deal will enable him to make exaggerated profits.

If that happens, only 15 per cent of the shares will be left in the hands of Jordanian private investors.

I suggest that the government buy these at the same price pledged to the Arab investor, so all the company returns to the public sector.

It seems that nobody is willing to confront the crisis boldly and responsibly, yet there should be plans to restructure the company in order to rescue it.

The writer is a Jordanian economist and investor. He contributed this article to The Jordan Times.