Joramco and Jalco privatisation attracts interest

Jordan Aircraft Maintenance (Joramco) and Jordan Airmotive (Jalco) are to be sold off by the Jordanian government as part of the country’s privatisation drive.

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By  Neil Denslow Published  December 30, 2003

Jordan Aircraft Maintenance (Joramco) and Jordan Airmotive (Jalco) are to be sold off by the Jordanian government as part of the country’s privatisation drive. The two companies have already attracted interest from three maintenance shops, which are expected to table formal bids by the 29th of January deadline. Joramco, which performs aircraft maintenance, and, Jalco, an engine shop, were both originally part of Royal Jordanian. The airline still makes up a large portion of their business — 55% in Joramco’s case — but both companies have extended their range of customers since being spun off. This process should be continued further through the privatisation. “The sale of the two companies will pave the way for the private sector to play a bigger role in the development of these companies as they achieve more growth and progress,” explains Abdel-Rahmen El-Khatib, director of air transport sector, Jordan’s Executive Privatization Commission. To ensure continued business from Royal Jordanian, the airline is being offered a 20% share in the two companies in return for an exclusive maintenance contract. This part of the deal isstill to be finalised, but the carrier expects to take it up. “Certainly, we are going to do it,” says Khalil Saoud, head of engineering & maintenance department, Royal Jordanian. The remaining shares in the companies will be offered to investors without any nationality restrictions. Foreign companies have already bought into the Jordanian aviation sector in earlier privatisations — the Spanish group Aldeasa bought 80% of Airports Duty Free Shops (ADFS) and the British Alpha Group along with local investors took a similar stake in Jordan Flight Catering Company (JFCC) — and Joramco and Jalco have also attracted international attention. “We have had interest from within the region and from outside the region,” notes Bashir Abdel Hadi, general manager, Joramco. Two companies signalled their interest before the sell-off was officially announced and a third has now also made inquiries. “I suspect the [first] two companies will express their interest again, officially now… [and] I also received a call from a third interested party who is coming to visit us in Jordan to understand the process, so there are three interested parties so far,” says Hadi. Official expressions of interest for the companies need to be made before the 29th of January, after which requests for proposals will be sent out. “We expect it will take six months to close the deals,” says El-Khatib. The two companies are an attractive proposition for investors, as they have facilities near both the European and Middle East markets. They also have sound finances; Joramco, for instance, achieved profits of US $4 million last year, and it has had average revenues of $25 million in the three years since it was spun off. The company, which is also FAA and JAA approved, handles an average of 250 aircraft per year. This includes seven D-checks last year for a range of customers, including Kuwait Airways, RJ and Air Memphis. “Joramco is a well established maintenance facility, which has a good reputation,” says Hadi. “Its edge is providing high quality services at very competitive prices, which can be as low as 70% of European prices for a similar quality.”

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