El Al posted a profit in the second quarter as revenue rose despite increased competition from foreign carriers.

The airline said on Thursday it earned $3.7 million in the April-June quarter versus a $6.1 million loss a year earlier.

Revenue rose 2.5 percent to $529.7 million, with higher passenger sales offsetting a decline in cargo revenue.

Operating expenses edged up 2 percent to $447.8 million, although jet fuel costs fell 4 percent.

El Al is implementing a plan to lower costs and reduce staff, Chief Executive Elyezer Shkedy said.

In response to trends in global markets and a new open skies agreement with Europe, El Al is making plans to start short-haul flights using four Boeing 737-800 jets beginning no later than the summer of 2014. Destinations have yet to be determined.

In the coming months, El Al said it would remove its fleet of Boeing 767-200 aircraft to bring the number of aircraft types it operates to four. It has already removed its fleet of 747-200s and 757s.

El Al said it had reached a financing agreement with a foreign bank for a loan of $190 million to buy four Boeing 737-900 aircraft that are due to enter service between October and next April. In all, El Al will buy six planes with an option for two more.

Its load factor - a measure of seats sold - was 82.4 percent, similar to a year earlier, while its market share at Ben-Gurion International Airport edged up to 33.8 percent. The number of seats on foreign airlines rose by 9 percent, while El Al recorded a 7 percent increase.

El Al is controlled by Knafaim Holdings with a 39 percent stake.

Earlier this year, the FIMI fund agreed to invest up to $75 million in El Al in return for up to 47 percent of the carrier. The deal is subject to the signing of a new labour agreement that is acceptable to FIMI, Israel's largest private investment fund.

FIMI has given El Al until August 29 to reach a deal.

"Negotiations on a new comprehensive labour deal are advancing slowly," Shkedy said. "I expect the members of the workers' committee to act responsibly and to take immediate action to formulate a new collective labour agreement which ... will allow the company to advance and grow and enable it to face the open skies policies and the ever-increasing competition successfully."

Israel signed an open skies deal with Europe in June, which El Al believes will cost jobs. El Al workers went on strike in April for two days in protest over the deal.