Wednesday, April 4, 2012

Royal Jordanian .... Merger Again

In an interview with Bloomberg Royal Jordanian's CEO indicated "a merger with a larger carrier is inevitable as high fuel prices, competition from local rivals and a sluggish economy squeeze earnings" (Click here for the full story). 

Ever since the idea of privatising Royal Jordanian started in the 1986, the original intention was to sell 49% of the airline to a strategic partner (BA was mentioned) or a foreign investor. Subsequently BA sponsored Royal Jordanian to join Oneworld in 2007.

Eventually Royal Jordanian was privatised in 2007and its shares listed in the Amman Stock Exchange. 

The idea of a merger with another airline was brought up by the CEO in June 2010 "There is room for airlines like RJ to merge with another carrier," he said. "I think consolidation will happen, but not now and it will be like Air France KLM, British Airways and Iberia, Lufthansa-Swiss…Airlines will maintain their national identity." (Click here)

At one time it was thought the airline will merge with Gulf Air, currently a remote possibility given GF's financial conditions. Another possibility is Etihad Airways which already owns 29.2% of Airberlin another Oneworld airline.

One thing is certain the airline requires a cash injection to cope with the oil prices and to finance its B787s to be delivered starting 2014.

Only time will tell how things will develop in the highly volatile political and economical climate in Jordan and the MENA region in general.

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