With a going concern qualification attached, El Al released third quarter financials this morning that show a rise in revenue but a substantially larger loss. The company says that the net loss was partly because of write-downs of the value of several aircraft that are due to be withdrawn from service.
El Al’s operational revenue rose 14% in comparison with the second quarter of this year to $253 million, while its quarterly loss grew 69% to $136 million. Operating profit fell to $3 million from $20 million in the previous quarter, which the company said was because of “one-time restructuring expenses.” In comparison with the third quarter of 2020, when the coronavirus pandemic was at its height, revenue grew 500%.
In the first nine months of this year, revenue grew by 16% in comparison with January-September 2020, and totaled $592 million. Operating profit was $26 million, versus an operating loss of $18 million in the corresponding period of last year. The net loss for the period narrowed somewhat, to $303 million from $391 million in the corresponding period.
Falling market share
During the quarter, El Al had to deal with restrictions on passenger traffic. Only on November 1 was Israel opened up to incoming tourists, still subject to restrictions. Nevertheless, the company reports growth in seat occupancy to 71.4%, and increases in seats offered and hours flown. Profit per passenger also improved, but El Al’s market share at Ben Gurion Airport fell as foreign airlines, particularly low-cost airlines, resumed flights. El Al’s market share in the third quarter was 21.6% of all passenger traffic. El Al’s fleet numbers 45 planes, with an average age of 10.6 years.
Activity in the first three months of 2021 was 28% of activity in the corresponding period of 2019.
Revenue from ticket sales grew 32% in the third quarter of this year in comparison with the previous quarter, to $184.3 million. Cargo traffic also grew.
The rise in revenue was offset by a significant rise in operating expenses. The compensation item rose by $51 million because of the return of employees who had been on unpaid leave and because of unfavorable exchange rate effects. The rise in oil prices led to a $54 million rise in spending on jet fuel. The company also made large severance payouts.
Cash flow improved to $10.5 million, which compares with a $54.6 million deficit in the first three quarters of 2020.
El Al has recently reached agreement with the Ministry of Finance on aid amounting to $30 million, in the form of three-year convertible bonds. The owners will inject a $63 million loan into the company in three tranches. Under the agreement, El Al will sell part of the ownership of its frequent flyer program for at least $100 million. Before the coronavirus pandemic, the frequent flyer club was valued at $300 million. Bank Hapoalim has been in talks with El Al on buying part of the club and integrating it into its Bit payments app.
Published by Globes, Israel business news – en.globes.co.il – on November 24, 2021.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.
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