El Al Boosts Profits By 1000% With Record-Breaking 2nd Quarter Earnings

Summary

• EL AL reported its highest second-quarter profit since privatizing, with significant revenue growth and increasing passenger demand.
• The airline achieved an operating profit of $90 million in Q2 2023, compared to $9.4 million in the same quarter last year.
• EL AL is on a path of continued growth, with plans to expand its fleet, and a final decision on aircraft orders is expected early next year.

Despite capacity levels still being slightly below pre-pandemic levels, Israeli flag carrier EL AL has recently reported the highest second-quarter profit since the airline was privatized about two decades ago. With corresponding revenue numbers and increasing passenger demand, the airline seems well on track to hit this year’s estimated revenue forecast of nearly $2.5 billion.

EL AL’s best second quarter ever

For the second quarter of this year ending June 30th, the flag carrier earned an operating profit of about $90 million, which was ten times the operating profit of $9.4 million earned in the same quarter of last year. Revenue for this year’s second quarter was at $630 million, a significant 22% increase from the $516 million revenue earned during the corresponding quarter in 2022.

The airline also earned a gross profit of $58.8 million, up from a notable gross loss of about $17 million from last year’s second quarter. Altogether, the revenues for this year’s initial six-month period reached an estimated $1.12 billion, and celebrating the good numbers and the best second quarter ever was Dina Ben Tal Ganacia, Chief Executive Officer of EL AL, as she highlighted:

“After a successful first quarter that represented a good opening point, we are delighted to present record results for the second quarter, which was the second most successful quarter for the company since its IPO. With the stabilization of revenue and the strict streamlining measures during the Covid pandemic, we are on the right path to maintain financial stability and soundness.”

Continued growth for EL AL

In light of an excellent 2023 so far and consecutively successful quarters, Ben Tal Ganacia also hints that EL AL is on a continued path for strategic growth all around. Two months ago, the flag carrier signed a first-of-its-kind collaborative agreement with Delta Air Lines to offer more convenient connections for passengers flying between Israel and the US.

The airline also mingled with sustainability after breaking into the Sustainable Aviation Fuel (SAF) market for the first time during the long-awaited arrival of its fourth Boeing 787-8 Dreamliner last month, bringing its total Dreamliner fleet count to 16. The delivery flight was powered by about 30% of SAF, signaling the first use of biofuel for EL AL.

Together with the completed retrofit project for the airline’s Boeing 777 fleet, Ben Tal Ganacia highlighted that all these recent developments were part of EL AL’s near-term business plan – a first in the flag carrier’s history since privatization. She shared the following:

“I am proud to present for the first time the five-year business plan, which has been built in a gradual manner and in line with our strategic plan. I believe in this plan and am confident that we will meet the goals we have set for ourselves.”

A potential historical change for EL AL

As part of this five-year plan, the Israeli carrier intends to expand its fleet from the current 46 aircraft to at least 59 by 2028, except that the airline has zero aircraft orders on the books. While EL AL has been a primary all-Boeing operator since its establishment in 1948, the airline is potentially looking to shake up its short-haul fleet by replacing the older Boeing 737-800s with Airbus A321neos.

The airline has been discussing with the European aircraft manufacturer, mainly about list prices for the narrowbody aircraft. But the airline is not entirely abandoning traditional supplier Boeing, as talks are allegedly in place for possible orders of the Boeing 737 MAX, which will likely replace the 737-800s too, or perhaps the younger 737-900ERS in the airline’s short-haul fleet.

Considering how massive these decisions would be – a choice between making a historical change in aircraft supplier or sticking with the traditional supplier for new-generation fleet replacements, Ben Tal Ganacia suggests that a final decision will only likely be made early next year. But whichever direction EL AL chooses, new aircraft orders are always excitingly progressive news for any airline.

Source: Globes