El Al Israel Airlines (TASE: ELAL) has again broken its own records, posting a net profit for the third quarter of $187 million, 3.6 times the $52 million profit in the corresponding quarter of 2023. The result is highly impressive, given that the profits in the first two quarters of the year were also new peaks for the airline: $81 million in the first quarter and $147 million in the second.
Revenue has also reached new highs. In the third quarter of this year, revenue totaled $1 billion, 20% more than in the previous quarter, and 47% more than in the corresponding quarter last year. In the first half of 2024, El Al’s revenue totaled $1.6 billion. EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring or rent costs) more than doubled to $360 million.
El Al generated cash of $320 million in the third quarter, which compares with $93 million in the corresponding quarter of 2023. The result is a near doubling of the company’s shareholders’ equity to $371 million, after it switched to positive shareholders’ equity only in the previous quarter. The company’s net debt continued to shrink, and stood at NIS 376 million at the end of the third quarter, down from NIS 1.43 billion at the end of 2023.
The extremely strong results of course reflect the fact that the third quarter is the summer season, combined with El Al’s huge market share at Tel Aviv’s Ben Gurion Airport, with many foreign airlines having stopped flying to Israel because of the Swords of Iron war. In the third quarter, El Al carried 43% of the passengers passing through the airport (about 670,000 monthly), and the trend has continued into the fourth quarter, particularly after the missile attack on Israel from Iran in early October.
El Al’s outstanding financial performance can also been seen in metrics such as RASK (revenue per available seat kilometer), which rose by 23% in comparison with the corresponding quarter, as its load factor (seat occupancy) hit 94%, up from 88% in the corresponding quarter, and RRPK (revenue per revenue passenger kilometer) rose by 16% in comparison with the corresponding quarter of 2023 and by 2% in comparison with the previous quarter of 2024.
The company of course acknowledges that the story is the Swords of Iron war, and El Al’s dominance of the skies. "The growth stems from extraordinarily high occupancy rates and from high demand for the company’s flights because of the decline in flights by foreign airlines to Israel," it states.
Nevertheless, the state will still not see any taxes from El Al, as the losses carried forward from the crisis year of 2020, when its auditors appended a going concern qualification to its financials, still amount to hundreds of millions of dollars.
El Al also stresses once more that anyone who wants to travel with it overseas should buy tickets early, as it operates flights at fixed reduced fares to four destinations from which connecting flights can be taken to other destinations around the world: Larnaca ($200); Athens ($300); and Vienna and Dubai ($350). "Tens of thousands of tickets were offered to these destinations, and the high demand together with the price led to most of the flights filling up in advance, which means that flights cannot be booked to these destinations close to the take-off date," the company says.
El Al’s share price has risen 220% in the past year. The airline’s market cap is currently NIS 3.4 billion (which includes a NIS 500 million equity offering). The main beneficiary is of course the controlling shareholder, Kenny Rozenberg, who holds a 46.2% stake in the airline, worth NIS 1.6 billion.
El Al CEO Dina Ben Tal Ganancia said, "El Al has been operating on an emergency footing for over a year, with the aim of ensuring that the skies between Israel and the world remain open. This is vital for the continuation of business and diplomatic activity in the country. Aviation is a main artery of life in Israel, and while the other, foreign airlines are yet to resume operations, the market will continue to encounter challenges, and passenger demand will not stabilize."
Published by Globes, Israel business news - en.globes.co.il - on November 20, 2024.
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