Middle East

Flag carrier El Al Israel Airlines Loss Widens

El Al Boeing 737-800
El Al Boeing 737-800 | Tis Meyer

El Al Israel Airlines announced today that operating revenues in the first quarter of 2017 amounted to approx. USD 418 million, compared to approx. USD 396 million in the first quarter of the previous year, indicating a growth of about 5.3%.

The number of flight segments in the first quarter of 2017 increased by approx. 7.1% compared to the first quarter of the previous year; ASK-Available seat kilometer increased by approx. 1.3%; the Company’s activity in terms of RPK (revenue-passenger-kilometers) increased by approx. 5.1%.

Passenger Load Factor stood at approx. 83.7%, an increase of about 4% compared to the first quarter of the previous year.

Average total income per RPK (Yield) increased by about 0.5% compared to the first quarter of the last year.

El Al market share at Ben Gurion Airport stood at approx. 32.8%. during this quarter, the number of passengers carried by the Company increased by about 7%, whereas overall passenger traffic at Ben Gurion Airport rose by approx. 17%.

Loss before taxes in the first quarter of 2017 amounted to approx. USD 39 million, compared to a loss before taxes of approx. USD 34 million in the first quarter of the previous year.

Net loss in the first quarter of 2017 amounted to approx. USD 30 million, compared to a net loss of approx. USD 21 million in the first quarter of 2016. This increase is mainly due to an increase in payroll costs (resulting mostly from the timing of one-time bonuses for 2016 and the shekel appreciation) and a rise in jet-fuel costs.

Cash flow from operating activities in the first quarter of 2017 amounted to approx. USD 77 million compared to approx. USD 72 million in the first quarter of last year.

EBITDA amounted to approx. USD 10 million, compared to approx. USD 11 million in the first quarter of last year.

The Company’s cash balances as of March 31, 2017, were approx. USD 228 million.

David Maimon, El Al’s Chief Executive Officer, said:

“The Company presented impressive operating results for the first quarter, better than those of the first quarter of last year, and recorded a growth of about 5.3% in revenues, despite intensifying competition and expansion of Ben Gurion Airport’s Open Sky Policy. The number of passengers carried by the Company rose by about 7%, the Company’s seat availability grew by about 1.3%, its operations increased by about 5%, passenger load factor grew by approx. 4% to 83.7%, which is unusually high, particularly in a weak seasonal quarter.

“As part of the Company’s route expansion strategy, we are preparing to launch the new route to Miami in early November this year.

“The Company is in the final preparations for receiving of the Dreamliner aircraft, the first of which is expected to arrive this August. These airplanes will provide our customers with ultimate comfort, customer experience and quality service, and will enhance the Company’s ability to continue to successfully cope with market conditions in the face of intensifying competition.”

Dganit Palti, El Al’s Chief Financial Officer, stated:

“In the first quarter, the Company recorded an impressive growth in revenues and gross profit, along with a decline in operating profit, due to an increase in payroll costs, which resulted from the shekel appreciation compared to the dollar and the timing of bonus payments for the year 2016. In addition, fuel expenses increased as a result of a price increase which was partially offset by a positive effect of hedging transactions.

“The Company’s operation generated positive cash flow from operating activities of approx. USD 77 million and with a cash balance of approx. USD 228 Million dollars.

“During the first quarter, the Company began making advance payments for the Dreamliner aircraft, as part of its Aircraft Acquisition Program, totaling approx. USD 54 million dollars, part of which was financed by bank loans.

“The cash balances of the Company’s reserve fund and its high cash flow from operating activities provide a solid foundation for investment promotion within the framework of the Company’s long-term strategic plan.”

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