Royal Jordanian turnaround plan, with new Washington DC route, would be subject to US anti-Gulf tax

Royal Jordanian is once again in turnaround mode. Having been battered by the global financial crisis, Arab Spring and regional instability, RJ's mid-decade stability was short lived as currency swings and overexpansion in Asia returned it to a loss. New CEO Stefan Pichler has a five year management plan to reduce unit costs by 6%, while growing unit revenue 7%.

RJ will consolidate its narrowbody fleet, likely removing its Embraer E-jets and growing the number of Airbus narrowbodies. RJ's widebody fleet of 787s – already reduced from its initial order – may be capped.

There is significant underutilisation of the 787 fleet, which means that RJ would be enabled to achieve its objective of opening Washington DC service within five years. However, Royal Jordanian's US network would be subject to a proposed tax provision from the US that targets Gulf superconnector airlines. RJ, a member of American Airlines' antitrust immunity joint venture, appears to become a casualty if the bill passes into law.

Other network developments include RJ's plan to convert Copenhagen and Stockholm charters to scheduled service while developing a secondary hub at Aqaba, Jordan's gateway to Red Sea tourism. Mr Pichler is RJ's latest executive out to prove Royal Jordanian has a sustainable market niche in the Levant, despite strong growth from superconnectors in the Arabian Gulf.

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