The CEOs of Israeli airlines El Al Israel Airlines Ltd. (TASE:ELAL), Israir (TASE: ISRG), and Arkia were summoned today to meet with Minister of Economy and Industry Nir Barkat due to the sharp rise in airfares. Israir CEO Uri Sirkis was the first to meet with Barkat this morning followed by El Al CEO Dina Ben Tal Ganancia.
Ben Tal Ganancia and Barkat agreed that El Al will offer relatively cheap return tickets to four destinations from which Israelis can fly on to other places. Return fares to the four destinations are Athens, Greece ($299), Larnaca, Cyprus ($199), Dubai, UAE ($349), and Vienna, Austria ($349). These are flights that will be added to El Al's schedule, with tickets sold for about these prices until the end of 2024.
El Al also promised to reduce fares on other flights in which there are available seats, of which there are probably not many due to low supply and high demand from Israeli passengers.
In this way Ben Tal Ganancia and Barkat reached agreement that will allow Israelis access to overseas vacations and business flights without the need for the ministry to intervene on prices of El Al flights worldwide. Ben Tal Ganancia said, "We continue to work to increase the supply of seats as much as possible and to expand the flight schedule. This move will allow us to offer tens of thousands of seats at affordable prices that are known in advance, and to provide an extensive response for destinations that are connecting points to the different continents."
El Al's last quarter
At the beginning of the week, El Al surprised investors with superb results for the second quarter of the year - $147 million profit, up 84% compared with the first quarter 2024 and the "best quarter in its history," according to the management. This trend is expected to continue in the third quarter, after more and more foreign airlines have recently stopped their flights to Israel, due to fears of an Iranian attack.
So the coming reports of El Al, controlled by Kenny Rozenberg and are expected to show equally high profits. In the first half of 2024, El Al presented a jump of about 40% in revenue to nearly $1.6 billion dollars, and a net profit of $226 million, over tenfold the profit in the first half of last year.
The big winner is Rozenberg. About four years ago, following the outbreak of the Covid pandemic, El Al's continued operations were threatened, when scheduled flights of all the airlines worldwide were suspended. Auditors even attached a "going concern" qualification to the company's reports. The state came to the aid of El Al, to the tune of hundreds of millions of dollars, alongside capital injections from new controlling owner Rozenberg, to bridge its cash gaps and allow the airline to meet its obligations, despite the the crisis.
Since the beginning of 2024, El Al's share price has jumped 66% and the company's market cap is NIS 2.4 billion. In the past three years, the share price has soared 120%, as it recovers from the Covid crisis. But over the last five years, to the pre-Covid period, the share price has recorded a negligible return of 2%.
Published by Globes, Israel business news - en.globes.co.il - on August 21, 2024.
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