El Al Posts Q2 Profit, Despite Increased Competition From Foreign Carriers

Amid plan to lower costs and reduce staff, Israeli airline reports $3.7 million profit versus a $6.1 million loss in April-June 2012.


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.

An El Al airplane in flight.Credit: Archive
El Al workers protesting in Jerusalem, April 21, 2012.Credit: Olivier Fitoussi

Click the alert icon to follow topics:



Automatic approval of subscriber comments.

$1 for the first month

Already signed up? LOG IN
A family grieves outside the SSGT Willie de Leon Civic Center following the mass shooting at Robb Elementary School in Uvalde, Texas on Wednesday.

Israeli PM Offers Condolences After Texas Gunman Kills 21 at Elementary School

U.S. President Joe Biden, this week.

Biden Decides to Keep Iran's Revolutionary Guards on Terror List, Says Report

ADL CEO Jonathan Greenblatt.

Progressive Jews Urge ADL Chief to Apologize for Calling Out Democratic Activist

Democratic Sen. Bernie Sanders with Jessica Cisneros in San Antonio last week.

It’s AIPAC vs. Bernie Sanders in Too-close-to-call Texas Democratic Runoff

U.S. President Joe Biden. Making a historic pivot to Asia.

Biden Does What His Three Predecessors Talked About Yet Failed to Do

Meir Kahane addressing his followers during a demonstration in Jerusalem, in 1984.

Why the U.S. Removed Kahane Chai From Terrorist Blacklist