After a long period of calm, trading in shares of El Al Israel Airlines Ltd. (TASE: ELAL) has again become highly volatile. During today's session, the share price fell by as much as 7%, although in the afternoon the falls moderated to 2-3%. Today's decline was a continuation of last Thursday's trend, when the share fell by 5% intraday, but actually closed 3% up, after falling by a similar amount the previous day.
The volatility of the past few sessions continues the instability and the negative sentiment towards the airline's stock that have been around for a while, against a background of negative events to do with its financial results, fuel prices, changes in dollar exchange rates, and problematic labor relations within the company.
El Al's share price has fallen 50% so far this year, which will probably mean ejection from the Tel Aviv 90 list in the next update by the Tel Aviv Stock Exchange in August. In the past twelve months, El Al's share price has fallen 75%, giving the company a market cap of NIS 400 million, meaning that it has shed NIS 1.2 billion from its value in this period.
Disrupted flights
El Al has returned to the headlines because of a series of disruptions to its flight schedule that the company attributes to "operational circumstances" but that, as far as is known, are connected to the difficulties in talks between the airline and its pilots.
El Al has also been in the news recently because of the refusal of some haredi (ultra-Orthodox Jewish) passengers to sit beside women, which delayed a flight from New York to Tel Aviv and caused a public outcry in Israel.
"El Al's stock has been on a negative trend for a year because of a cluster of circumstances and events," Psagot analyst Noam Pinko said today. Looking ahead, Pinko added, "It's hard to know where the share price will go in the future, because there are many factors that will affect its direction: how its financials look; where fuel prices and the dollar go; and how the negotiations with the pilots end.
"The purchase of Dreamliner aircraft is also weighing on the share price at the moment, because it causes a certain degree of inefficiency in the company's operations, but that should be solved in the course of time."
The share price of Knafaim Holdings, through which Dedi and Tamar Borovich control El Al, also fell today, and is down 40% for the year to date, and 65% over the past twelve months, giving the company a current market cap of NIS 180 million.
El Al started 2018 on the wrong foot, its first quarter loss rising almost 50% to $46 million, affected by a rise in jet fuel process, a rise in salary costs mainly due to the strengthening of the shekel against the dollar, and a decline in the airline's market share at Ben Gurion Airport.
In 2017, El Al's net profit fell by more than 90%, to less than $6 million.
Published by Globes [online], Israel business news - www.globes-online.com - on July 2, 2018
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