Sources inform ''Globes'' that Sonol Israel Ltd. has won a tender for the supply of jet fuel to foreign airlines. The contract is worth NIS 300-400 million shekels a year, making it the second largest contract in the civil aviation sector, after the NIS 600-700 million jet fuel contract for El Al Israel Airlines Ltd. (TASE: ELAL).
Sonol beat Paz Oil Company Ltd. (TASE:PZOL), Delek Israel Fuel Corporation Ltd. (TASE: DLKIS), and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) in the tender. Oil Refineries Ltd. (TASE:ORL) did not bid in the tender although it could have done so, but will supply the jet fuel to Sonol. Paz subsidiary Aviation Services and Assets Ltd. provides the airlines with fueling services.
Sonol began supplying jet fuel to the foreign airlines on January 1. Customers include Lufthansa, Austrian Airlines, Swiss International Airlines, and Turkish Airlines.
Azrieli Group, owned by David Azrieli, controls Sonol through Granite Hacarmel Investments Ltd. (TASE: GRNT). Since Azrieli's takeover of Granite Hacarmel, Sonol has worked hard to increase its share of the institutional market, including the expansion of its non-gas stations' sales network.
In the past two years, Sonol sold NIS 120 million a year worth of fuel to Lufthansa and Turkish Airlines. The present tender is larger, including more airlines, which banded together to cut fuel procurement costs.
Sources at the fuel companies said that the tender was competitive, and, despite its large size, its gross profit margins are actually quite small. The sources added that Sonol has also resumed supplying jet fuel to El Al, providing a tenth of its fuel. This is a surprising development since Sonol lost its contract to supply El Al with jet fuel shortly after Azrieli took over Granite Hacarmel from the Borovich family, which controls El Al.
Following El Al's jet fuel supply tender held in December 2007, Paz supplies 70% of its fuel, and Sonol, Dor-Alon, and Delek Israel supply 10% each.
Published by Globes [online], Israel business news - www.globes-online.com - on January 28, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008