Fuel price drop lifts El Al to profit

El Al  picture: Eyal Yitzhar
El Al picture: Eyal Yitzhar

The Israeli airline posted a profit of $107 million for 2015, after a $28 million loss the previous year.

El Al Israel Airlines Ltd. (TASE: ELAL) made a $107 million profit in 2015, which compares with a loss of $28 million in 2014. The airline presented substantial improvement in other financial measures as well, with gross profit up 66% in comparison with 2014 to $461 million and EBITDA soaring 156% to $331 million.

El Al's top line actually fell, down 1% on 2014 at $2 billion, as revenue from passenger and cargo flights declined. Currency fluctuations also eroded the airline's revenue, although they had a beneficial effect on expenses. Total operating expenses fell 12% to $1.6 billion in 2015, mainly thanks to a 32% fall in expenditure on fuel. The price of oil declined by nearly 70% in 2015, and transport companies were among the main beneficiaries.

El Al carried over five million passengers in 2015, 8% more than the 4.7 million carried in 2014, among other things because of the launch of the UP brand as a response to competition from low-cost airlines.

El Al announced a dividend of $15 million, in addition to the $25 million dividend it distributed a few months ago.

In the past twelve months, El Al's share price has shot up by 325%, bringing the company to a market cap of NIS 1.5 billion. In 2015, the share price rose 374%.

El Al CEO David Maimon said, "Thanks to outstanding workers, a dramatic improvement in operating efficiency because of the fall in the price of fuel, the introduction of new aircraft, flights with modular pricing under the UP brand that boosted demand, substantial investment in the e-commerce website, and the signing of a historic pay agreement, we are presenting record results. I hope that we shall shortly sign a pay and productivity agreement with the pilots that will enable us to make a further improvement in efficiency and also to improve their salaries by sharing the saving with them. In that way, we shall be able to continue with the accelerated development of the company and our service to passengers, in the face of growing competition in the global aviation market."

Published by Globes [online], Israel business news - www.globes-online.com - on March 23, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

El Al  picture: Eyal Yitzhar
El Al picture: Eyal Yitzhar
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