Although there is some recovery in revenue, the coronavirus pandemic and the consequent dramatic curtailing of flights leave a strong mark on the quarterly financials of El Al Israel Airlines Ltd. (TASE: ELAL). The airline posted a net loss of $80 million for the second quarter of this year, which compares with a loss of $104 million in the second quarter of 2020.
On its top line, El Al reports revenue for the quarter of $222 million, which compares with $151 million in the corresponding quarter.
El Al's operating expenses for the quarter totaled $242 million. The company says that the growth in activity in comparison with the second quarter of 2020, when passenger flights were almost completely halted, led to an increase of $81 million, or 50%, in operating expenses, the main items being an increase of $25 million in compensation, as employees who had been on unpaid leave were recalled, a $25 million rise in spending on jet fuel, and negative effects of exchange rate differences. A streamlining agreement with the employees that came into force in June had a moderating effect on the rise in the compensation expense, and the effect is expected to become more pronounced in the coming quarters.
In the first half year, El Al's revenue declined by 28% in comparison with the first half of 2020, to $340 million, and the airline posted a net loss of $166 million for the period, which compares with a net loss of $244 million in the first half of 2020.
El Al CEO Avigal Soreq said, "Despite the collapse in passenger numbers at Ben Gurion Airport, we succeeded in stabilizing our activity, kept to the business plan and the targets we set for ourselves for this quarter, and even managed to improve our main operating parameters. We have a strong brand, a new management, and operating flexibility that we have attained through the streamlining measures that we have carried out. The second quarter results unambiguously demonstrate that when we are allowed to work, we advance by leaps and bounds.
"The spread of the Covid-19 Delta variant obliges us to adapt our expenses to the scope of our business. In addition, we need a further aid package from the state, in the light of the new restrictions on our activity, like El Al's competitors, which are receiving subsidies from their governments, giving them an unfair competitive advantage."
Published by Globes, Israel business news - en.globes.co.il - on August 18, 2021
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