$32m loss for El Al in first quarter

The airline's market share fell. CEO Elyezer Shkedy: We're dealing with challenging changes.

El Al Israel Airlines Ltd. (TASE: ELAL) today published its financial report for the first quarter of 2013. Revenue edged up 0.2% to $431 million for the first quarter from $429.1 million for the corresponding quarter of 2012. Revenue from passenger traffic rose by 2%, but cargo revenue fell by 11.5%.

El Al's market share fell from 36.6% in the first quarter of 2012 to 34.7% in the first quarter of 2013.

Jet fuel expense rose by $7.1 million, or 4.8%, compared with the corresponding quarter. Jet fuel accounted for 39.3% of El Al's expenses in the first quarter, up from 37.7% in the corresponding quarter.

Gross profit fell to $37.9 million (8.8% of revenue) for the first quarter from $40.5 million (9.4% of revenue) for the corresponding quarter.

El Al's salary cost was $3.7 million higher in the first quarter than in the corresponding quarter. Most of the increase was due to the appreciation of the shekel against the dollar compared with the corresponding quarter, and pay hikes. The airline's headcount fell from 5,838 employees at the end of March 2012 to 5,768 employees at the end of March 2013.

The operating loss widened to $36.3 million for the first quarter from $23.8 million for the corresponding quarter, and teh net loss widened to $32.5 million from $23.2 million.

Cash flow from operations rose to $80.5 million for the first quarter from $65 million for the corresponding quarter.

El Al CEO Elyezer Shkedy said, "The results for the first quarter of 2013 were still affected by Operation Pillar of Cloud and by competition in the aviation industry. The company is constantly adapting to the situation, reducing activity, and streamlining. In the first quarter of 2013, the company reduced its activity compared with the corresponding quarter of last year. Operations of the airline's planes achieved an occupancy rate of 81.7%.

"We're continuing to adjust the company's situation to business circumstances and to deal with the fierce competition in the market and the challenging changes in the global and local aviation industry. As part of this, we are implementing a plan to cut costs and reduce the workforce."

Shkedy added, "The company has signed an agreement with First Israel Mezzanine Investors Fund (FIMI), under which FIMI will invest $75 million in El Al. FIMI's commitment to carry out the deal is subject to several conditions, including approval by the company's general shareholders meeting, obtaining regulatory approval, and the company signing a new collective agreement on terms which are satisfactory to FIMI."

Published by Globes [online], Israel business news - www.globes-online.com - on May 27, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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