Royal Jordanian chief leaves flag carrier

What's Down: Royal Jordanian Airlines' chief executive ejects after losing money during five of the last eight quarters, leaving the carrier in a tailspin as competition mounts.

Hussein Dabbas, Royal Jordanian's chief executive, resigned yesterday to pursue other opportunities, a spokesman for the airline said. Salah Malkawi for The National
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Airline passengers might be expected to feel queasy if the pilot abandons his post, but that is the position in which shareholders in Royal Jordanian Airlines find themselves.

Hussein Dabbas, the airline's chief executive, resigned yesterday to pursue other opportunities, a spokesman for the airline said.

The surprise departure comes three years after Mr Dabbas replaced Samer Majali, now the chief executive of Bahrain's Gulf Air.

A member of the British Airways-led oneworld alliance, Royal Jordanian has reported losses for six of the past eight quarters. Its most recent loss was 15.55 million dinars for the fourth quarter, even though sales have grown steadily.

The airline's Amman-listed share price has fallen 9 per cent this year to 0.6 Jordanian dinars. The shares were unchanged yesterday.

It has been a bruising decade for airlines, with the high price of crude oil eating into profit margins.

Oil prices remain high, with Brent futures averaging US$118.94 per barrel so far this year.

But Royal Jordanian has not been able to increase its fares in response to higher fuel prices because it is being undercut on ticket prices by new entrants to Jordan's market, said Abid Riaz, an aviation analyst at EFG-Hermes, which rates the stock a "sell".

"The reason for our sell recommendation is that we continue to believe it will be tough for them - they were impacted by what was going on in the region and Jordan's proximity to the unrest in Syria," he said.

But the Jordanian government's move to liberalise the kingdom's aviation market was also proving difficult for the carrier, leaving it unable to pass fuel surcharges on to its customers for fear of sending them to rival airlines.

Air Arabia has signed an agreement to establish a hub in Amman. This move is expected to increase the pressure on Royal Jordanian, while big Gulf carriers such as Qatar Airways, Etihad Airways and Emirates Airline are also gaining market share.