El Al posts second-quarter loss on rising fuel costs
Published: August 19, 2011
El Al 767-300. Photo: By Rob Finlayson
El Al Israel Airlines reported a second-quarter net loss of $ 19.7 million, reversed from a $ 14.8 million net profit in the prior-year period, as expenditures grew at nearly three times the rate of revenue.
Quarterly costs amounted to $ 470.2 million, up 17% year-over-year. El Al said in a statement, “Most of the increase stemmed from the costs of aviation fuel, which totaled $ 183.5 million [up 17.9%] … The company’s expenditure on jet fuel increased largely as a result of the sharp increase—about 47%—in the average price of the fuel, compared to the parallel quarter last year: from 227.4 cents a gallon to 334.6 cents a gallon.”
Second-quarter revenue lifted 6% to $ 530.5 million. Airline executives said the Tel Aviv-based company is in a relatively strong position given the difficult operating environment. VP-Finance Nissim Malki stated, “In spite of the challenging commercial conditions, El Al has systematically managed to present high liquidity, as expressed in the cash balance of over $ 174 million, a positive cash flow of $ 20 million in the quarter, and an increase in revenues of 6%.”
CEO and President Elyezer Shkedy said the carrier is “re-examining our route system.” Flights to Sao Paulo will be dropped, freeing up 777s for more profitable flying, he said. “We are also planning to remove aircraft that are considered fuel-inefficient from service, and to add winglets to the wing tips of other aircraft.”