Royal Jordanian reports $37 million 1H 2017 net loss

Royal Jordanian (RJ) incurred a net loss of JD26.3 million ($37.1 million) in the 2017 first half, a figure the airline said was driven by seasonality and a decline in average fares because of over-capacity in the industry.

The Amman-based carrier did not provide comparative figures for the year-ago period, or issue details of its revenue performance.

The airline pointed to a net profit of JD1.5 million in June, the last month of its half-year period, as a sign that the airline’s turnaround program was starting to take effect. In the same month in 2016, it incurred net loss of JD2.1 million.

In support of the notion that its performance is turning around, RJ noted that it carried 253,000 passengers in June, a 13% year-over-year (YOY) increase. Load factor increased 3.9 percentage points YOY to 64.1% in June 2017. The June 2017 profit was achieved despite a 27% YOY increase in fuel prices, the airline said.

RJ president and CEO Stefan Pichler expressed satisfaction with June’s figures, but acknowledged much remained to be done: “We have a lot of homework to do to transform RJ into a sustainable, profitable company for our shareholders, a consumer champion for all our guests and an employer of choice for all people in Jordan. While we are working on our strategic turnaround plan, we [will] now focus on early wins in the commercial area, like load factor and yield improvement. June worked out pretty well and I am confident that we will make up for the severe losses suffered in the first five months of operations in 2017.”

Pichler added that the first-half results were affected by a significant drop in fares, citing tough competition in the Gulf region.

In recent years, RJ has faced considerable pressure from the Gulf Big Three airlines—Emirates Airline, Etihad Airways and Qatar Airways—as well as from low-cost carriers and the loss of several regional markets beset by war or unrest.

In recent months, it has also been hit by the US and UK ban on large personal electronic devices in the cabin on US- and UK-bound flights. The US ban has been lifted, but the UK one remains in force.