El Al reports a net profit of $27 million for the third quarter

El Al Israel Airlines issued this financial report for the third quarter 2019:

  • For the third quarter of 2019, the Company reports a growth of 8% in seat availability, an increase of 6.5% in passenger traffic and an increase of 2% in market share.
  • At the end of the third quarter, 12 new 787-9 Dreamliner aircraft operated in the Company’s fleet. Four additional 787-8 aircraft will be added to the Company’s aircraft fleet by the end of the first quarter of 2020, thereby the Company expects to complete the Acquisition Program.
  • Despite the competition, the Company’s revenues increased to approximately USD 647 million.
  • Operating expenses for the quarter amounted to approximately USD 505 million, similarly to the third quarter of 2018, despite the 8% growth in Available Seat per Kilometer (ASK).
  • Fuel expenses decreased by approximately USD 13.5 million, both as a result of the decrease in jet fuel market prices and as a result of using the new efficient 787-9 aircraft.
  • Other income amounted to approximately USD 5.5 million for the quarter, due to the sale of one 767-300 aircraft which was removed from service, compared to an income of approximately USD 10 million for the third quarter of 2018, mainly from insurance receipts.
  • Profit before tax was adversely affected by approximately USD 4.5 million due to the implementation of the accounting standard IFRS 16 that increased the financing expenses by approximately USD 12.5 million and reduced the operating expenses by approximately USD 8 million.
  • Profit before tax for the quarter amounted to approximately USD 35 million, compared to a profit before tax of approximately USD 54 million for the third quarter of 2018. The profit was affected by an increase in financing expenses as well as an increase in payroll expenses, mainly due to a decrease in the discount interest rate on actuarial liabilities.
  • Net profit for the quarter amounted to approximately USD 27 million, compared to net profit of USD 42 million for the third quarter of 2018.
  • EBITDAR for the quarter amounted to approximately USD 140 million, similarly to the third quarter of 2018.
  • In the first nine months of 2019, the Company’s revenues amounted to approximately USD 1.66 billion, reflecting a slight growth compared to the Company’s revenues for the first nine months of 2018; loss for the period amounted to approximately USD 28 million, compared to a loss of approximately USD 21 million for the first nine months of 2018.

EL AL’s CEO, Gonen Usishkin:

“Notwithstanding the competition at Ben Gurion Airport, the Company succeeded to increase and improve its market share by 2%, with the number of passengers increasing by 6.5%.

“The Company’s Acquisition Program progresses as planned. Thus far, the Company has received 12 new 787-9 aircraft, and by the end of the first quarter of 2020, 4 additional 787-8 aircraft are expected to arrive, thereby the Program will be completed.

“Alongside this, at the beginning of the year, all the 767-300 aircraft were removed from service and thereafter all the 747-400 aircraft were also removed from service, as the last one terminated its operation at the beginning of this month with a special and exciting farewell flight, after nearly 50 years of service in the Company’s aircraft fleet.

“We completed the major part of the Aircraft Interior Improvement to 737-800NG narrow-body aircraft fleet.

“We entered into an agreement for the lease of 3 additional 737-800NG aircraft for a period of six years, of which the first aircraft is expected to be received in the next month, and the two others are expected to be received in April 2020.

“Out aircraft fleet has become younger and, for the first time, the aircraft average age falls below 10 years. Our product improves and we witness constant increase in our customers’ satisfaction.

“As part of our growth strategy, we enhance existing activities and continue to expand our network of routes by launching routes to new destinations. Thus far in 2019, the Company has launched the routes to Niece, San Francisco, Manchester, and Las Vegas, and in 2020 the Company is expected to launch the routes to Chicago, Tokyo, Dublin and Dusseldorf.

“In July 2019, we launched the new booking engine for the Matmid Frequent Flyer Club members and improved the value offer to the club members.

“In September 2019, the Company entered into a triangle agreement with CAL, Diners and a new strategic partner, MasterCard, in connection with the branded credit card, Fly Card. The new card to be issued is a combined Diners and MasterCard credit card that has a global coverage and offers expanded options to redeem points in the aviation and non-aviation world. The Fly Card credit card and the Matmid Frequent Flyer Club constitute one of the most important growth engines of the Company.

“I would like to thank our customers for their trust in EL AL. I am convinced that EL AL will continue to provide its customers with quality service, maximum comfort, technological innovation and advanced airplanes. We are doing the utmost to allow the customer to choose EL AL over and over again.

“I wish to express special appreciation to EL AL people in Israel and worldwide, who work with determination and dedication and make an extra effort for the Company’s success.”

Dganit Palti, EL AL’s CFO:

“The Company recorded a decrease in fuel expenses for the reported quarter, as a result of the decrease in jet fuel market prices and the amount of fuel consumed by the Company’s aircraft, notwithstanding the 8% growth in operations, mainly due to the operation of the 787-9 aircraft, which are more efficient in fuel consumption.

“The initial implementation of the accounting standard IFRS 16 adversely affected the Company’s results for the quarter by approximately USD 4.5 million, and for the first nine months of the year – by approximately USD 14.5 million.

“The company has signed an agreement with a JOLCO structure to finance the first 787-8 aircraft, expected to arrive this weekend. The USD 125 million financing includes a USD 106 million loan from a foreign bank for a 12-year period and an additional USD 19 million in Japanese Yen, to be provided by a Japanese company. The balance of the debt will be repaid after ten years at a pre-agreed amount of USD 45 million.”

El Al aircraft photo gallery: