El Al Q2 profit slides

Eleanor Steed
By Eleanor Steed August 17, 2017 14:03

El Al Q2 profit slides

El Al Israel Airlines announced yesterday that revenues in the second quarter of 2017 amounted to approx. US$541 million, compared to approx. US$537 million in the second quarter of the previous year, an increase of about 0.6%. Gross profit in the second quarter fell to US$107 million, compared to US$124 million in the second quarter of the previous year, a decline of about 13%. El Al’s operating profit dropped by 47% to US$27 million, compared to US$51 million in the second quarter of the previous year, while net profit dropped by 53% to US$16.4 million from US$35 million in the second quarter of 2016.

The number of flight segments in the second quarter of 2017 increased by approx. 2.4% compared to the second quarter of the previous year. El Al’s market share of passenger traffic at Ben Gurion Airport in the second quarter of the year was approx. 29.5%, compared to 34.2% in the second quarter of 2016.

Passenger Load Factor in the second quarter of 2017 rose to 84.3%, compared to 83.1% in the second quarter of the previous year. El Al’s ASK (Available Seat Kilometer) declined by about 3% and RPK (Revenue Passenger Kilometer) decreased by about 1% during the reporting period. The average total income per RPK (Yield) increased by about 0.7%.

Cash flow from operating activities was US$ 101 million during the second quarter compared to US$107 million last year. EBITDA fell to US$70 million from US$ 96 million in the second quarter of last year.

El Al’s revenues for the first six months of 2017 rose to US$959 million, compared to US$934 million in the first six months of the previous year, indicating a growth of about 2.6%. Gross profit fell to US$148 million in the same period, a decline of about 6.4%. The net Loss in the first six months of 2017 was US$13.6 million, compared to a net profit of US$13.6 million in the first six months of 2016.

“In the second quarter of 2017, EL AL (EAGM) had to cope with the huge growth in competition at Ben Gurion Airport,” says David Maimon, EL AL’s CEO. “Notwithstanding, revenues increased due to an increase in passenger segments. Load factor increased, cash flow is strong and the Company maintain its financial strength.”

El Al is expecting the delivery of its first of 16 new 787-9 aircraft later in August, which will begin operating in the next few weeks.

During the reporting period, El Al also submitted a request to the Antitrust Commissioner to approve the acquisition, through its subsidiary Sun d’Or, of Israir Aviation and Tourism from I.D.B Tourism. Maimon describes this transaction as “an important element in the implementation of EL AL’s long-term strategy to enhance and diversify the basket of services offered by the Company, allowing it to increase the entire Group revenues and accelerate the Company’s growth while increasing its volume of operations.”

El Al is launching a direct route to Miami in November, which is an important strategic step in the continued expansion of EL AL’s route network in North America.

Dganit Palti, El Al’s CFO, stated that during the second quarter the company recorded an increase in revenues, “despite the challenging business environment characterized by a significant increase in competition at Ben Gurion Airport”. He also pointed to the increase in jet fuel costs and payroll expenses, – the latter is mainly due to the new wage agreements and the strengthening of the shekel against the dollar.

Eleanor Steed
By Eleanor Steed August 17, 2017 14:03