With a 'going concern' warning attached, and as talks continue about its purchase by new owners, El Al Israel Airlines Ltd. (TASE: ELAL) published grim financial results for the second quarter of 2020 last night. The airline reported a net loss of $105 million in the second quarter bringing the loss in the first half of 2020 to $244 million. Meanwhile, the company reports a $135 million deficit in working capital.
The second quarter financial results were hugely influenced by the Covid-19 pandemic which led to the grounding of El Al's fleet and furloughing most of the airline's employees. The crisis has caused an unprecedented fall in demand because of government restrictions imposed since mid-March requiring Israelis returning from abroad to enter isolation for 14 days and the bar on foreign passport holders entering Israel.
With its fleet of 45 aircraft grounded, revenue in the second quarter fell 74% to $151 million. Revenue in the first half of 2020 fell 53% to $472 million. Fuel costs in the second quarter fell 83% to $108 million with 68% less fuel consumed due to the fall in operations.
According to the instructions of the Ministry of Finance, El Al is due to complete a public offering of $150 million on the Tel Aviv Stock Exchange by next Monday, August 31. After that it will receive State guarantees of 75% for bank loans of up to $250 million.
El Al CEO Gonen Usishkin said, "We are in the midst of an unprecedented crisis, which has never been seen before in all the years of commercial aviation. Since the outbreak of the crisis, the company has responded swiftly to minimize the repercussions, mainly through a sharp reduction in operations, with a sharp fall in the company's operational expenses with an emphasis on passenger activities, in order to adjust them to the new reality. The company has successfully expanded cargo operations through a rapid procedure of converting passenger aircraft to carry cargo and expanding the network of routes for cargo including destinations that the company had never previously flown to. As part of this, vital cargo was flown to combat the coronavirus - cargo, medicines, protection equipment, food and more, to Israel and to other countries."
He added, "The company is ready to tightly and carefully manage cash flow, among other things, through a wide range of financial measures, which will ease the company's problems in terms of cash flow, but without government support we cannot continue business operations. The company's activities depend on the abilities of countries to prevail against the virus and return confidence and safety to customers to fly as well as putting up State assistance. We all hope these aims will be realized quickly."
El Al has appointed deputy chairman Yehuda Levy as chairman to replace Eli Defes who stepped down earlier this month.
Published by Globes, Israel business news - en.globes.co.il - on August 27, 2020 © Copyright of Globes Publisher Itonut (1983) Ltd. 2020