VZCZCXRO5322
RR RUEHDE RUEHDIR
DE RUEHAM #4426/01 3051154
ZNR UUUUU ZZH
R 011154Z NOV 07
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 0779
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/FAA NATIONAL HQ WASHINGTON DC
RUEHEG/AMEMBASSY CAIRO 3411
RUEHLB/AMEMBASSY BEIRUT 2731
RUEHDM/AMEMBASSY DAMASCUS 3726
RUEHTV/AMEMBASSY TEL AVIV 0839
RUEHJM/AMCONSUL JERUSALEM 4683

UNCLAS SECTION 01 OF 02 AMMAN 004426 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ELA AND EEB 
 
E.O. 12958: N/A 
TAGS: EAIR ECON EINV KPRV JO
SUBJECT: ROYAL JORDANIAN IPO ON SCHEDULE FOR DECEMBER 
 
Sensitive but unclassified. Not for internet distribution. 
 
REF: A) Amman 4072 
 B) Amman 3286 
 C) Amman 1299 
 
¶1. (U) Summary: Royal Jordanian (RJ) Airlines president Samer Majali 
said that RJ's initial public offering is on schedule for completion 
in 2007.  Majali expects that 60 percent of shares will be 
Jordanian-owned.  RJ selected the GEnx engine for its 
previously-ordered Boeing 787s due in 2010.  RJ had its highest 
monthly volume of passengers ever in August 2007, and expects its 
business will grow its regional focus.  End Summary. 
 
IPO PROSPECTUSES WILL GO OUT IN MID-NOVEMBER 
-------------------------------------------- 
 
¶2. (U) EconCouns met with Samer Majali, President of Royal Jordanian 
Airlines, on October 29 to discuss the status of RJ's initial 
private offering (IPO) and its recent performance.  Majali said RJ 
is working closely with its lead investment bank Citigroup, and IPO 
prospectuses are expected to go out in mid-November.  He said he is 
consulting with multiple investment banks, and that a share price 
will be set on December 8.  Majali expected that RJ's IPO and its 
listing on the Amman Stock Exchange would be completed by the end of 
December. 
 
¶3. (U) When RJ's privatization was first planned, Majali said that 
RJ expected to sell its shares to a foreign carrier that would serve 
as a strategic partner.  The growing strength of RJ as a business, 
as well as increased travel to Jordan and the Middle East, has meant 
that RJ is able to go public independently without a strategic 
partner.  According to the GoJ plan (Ref B), the current sole owner 
- the government - will sell up to 74 percent of the RJ shares, of 
which 51 percent must be sold to Jordanians.  Majali said he 
expected that 60 percent of the shares would be Jordanian-owned 
after the IPO.  Three percent of shares will be allocated for the 
Jordanian Armed Forces (JAF), and eight percent of shares are set 
aside for RJ employees. 
 
RJ CHOOSES GE ENGINE 
-------------------- 
 
¶4. (U) In October, RJ selected the GEnx engine to power its 
previously-ordered Boeing 787s (Ref C).  RJ's first 787s are 
scheduled to be delivered in 2010, and when delivered, RJ will be 
the first carrier in the Middle East flying GEnx-powered 787s. 
While Boeing has announced a six-month delay for the first 787s, 
Majali expressed hope that Boeing will be on-schedule by the time 
RJ's airplanes are due for delivery.  Majali said that RJ will use 
the 787s for trans-Atlantic travel, and that its current Airbus and 
Embraer airplanes will fly regional routes. 
 
BUSINESS IS GROWING 
------------------- 
 
¶5. (U) RJ announced that in August 2007 it had its highest volume of 
passenger traffic ever with 256,000 passengers, marking a 16 percent 
increase over August 2006.  RJ operated 2708 departures in August, 
an increase of 23 percent over August 2006.  Aircraft utilization 
increased 16 percent from 10.1 to 11.7 hours per day.  Majali told 
EconCouns that he expected RJ's business to grow regionally and to 
focus less on long-haul flights.  He said that RJ has difficulty 
competing with the state-subsidized Emirates airline, noting that 
other Middle Eastern carriers are also less affected by fuel price 
increases because of government support. 
 
¶6. (SBU) Majali did not express concern about Delta's recent 
decision to provide non-stop service to Amman (Ref A).  He said 
Delta would operate just four flights weekly, while RJ would provide 
¶16.  He hoped that Delta's service would encourage more Americans to 
visit Jordan.  He did question Delta's decision to fly from New 
York's John F. Kennedy (JFK) Airport rather than its main hub in 
Atlanta, which he thought would provide greater product 
differentiation. 
 
LONG-TERM EMPLOYEES 
------------------- 
 
¶7. (SBU) Majali said that he has worked for RJ since 1979.  He 
described RJ as a family, and said the company has benefited from 
employees' tenure and multi-generations of employees from the same 
 
AMMAN 00004426  002 OF 002 
 
 
families.  Many of these employees remained loyal to RJ following 
the 1988 economic crisis and the 1990 Gulf War that almost crippled 
RJ when its fleet was evacuated to Vienna.  The decision to 
privatize resulted in down-sizing, and for many employees the 
transition from a public-owned utility to a private company has been 
difficult.  Nevertheless, most current employees want to stay, and 
he predicted the employee stock options from the IPO will help 
retention.  He commented that RJ's salaries are above average 
Jordanian government salaries but far below other private sector 
employers, but perks such as free tickets helped to offset the 
differences.  He estimated that 20 percent of his employees were 
non-Jordanian, especially flight attendants who are recruited for 
their language ability.  He said Jordanian pilots are particularly 
in demand and serve in airlines around the world, employing their 
private sector and military experience. 
 
Visit Amman's Classified Website at 
http://www.state.sgov.gov/p/nea/amman 
 
HALE