Israel's flagship carrier El Al airlines, which is one of very few international airlines still operating in Israel due to the current war, finished the second quarter of the year with an excellent showing; the airline operates almost alone on profitable routes to London and the United States, and sharply raised ticket prices that can reach up to $3,000 for a ticket to New York and about $9,000 in business class.
The airline's net profit was $147 million in the second quarter of this year, a jump of 2.5 times compared to $59 million in the same quarter last year. Revenues amounted to $839 million, a growth of 33% compared to the corresponding quarter last year. A record occupancy of flights - 92% - continues, and even though the prices are at their peak, there are no tickets left for August to the U.S., except for last minute cancellations.
The average revenue per seat per miles flown continues to rise. In the second quarter it increased by 9% compared to the first quarter of 2024 and 17% compared to the corresponding quarter last year. El Al explains that not all of the increase are due to rising ticket prices, noting that the cancellation of less profitable routes such as Johannesburg, contributed to the increase in income per seat.
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El Al is one of the only international airlines currently flying to and from Israel
(Photo: Eran Granot)
El Al enjoys not only an almost complete exclusivity in flying passengers from and to Tel Aviv, but also in cargo transport. The thinning out of flights by foreign companies also led to higher demand for flying cargo and El Al raised its prices there at well. The airlines' total revenue from cargo in the second quarter rose to $56 million compared to $27 million in the corresponding quarter last year.
In this quarter for the first time the company, which was almost on the verge of bankruptcy several years ago and needed government assistance, moved to a positive equity of $200 million, which is also thanks to its own capital raising. Profitability in the current quarter also contributed to the decrease in financing expenses which amounted to $3 million compared to $31 million in the previous quarter. The decrease in financing expenses is due to interest on the company's deposits - the increase in revenues and profits increased El Al's liquidity balances.
At the same time, El Al reported that a huge deal was signed for the purchase of 31 Boeing Max 737 aircraft at a cost of $2.5 billion, which will replace El Al's old narrow-body aircraft.
"The last few days prove to us in particular how fragile the concept of 'open skies' is in the context of Israel. The cancellations of the foreign companies require us to do everything in order to provide an appropriate response to the entire Israeli public," El Al CEO Dina Ben Tal Ganancia said. "During the second quarter, Israelis sought aviation certainty and the demand for El Al flights continued despite the gradual return of the foreign airlines and before the current cancellations of some of the foreign airlines that operated in Israel, which is provided alongside making commercial and operational adjustments, while exhausting our existing fleet of aircraft and air crews."
El Al CFO Yankla Shahar said: "During the second quarter, the company raised capital through the issuance of a package that includes shares and warrants in exchange for a total of about 511 million shekels (about $140 million). The remaining cash accumulated by the company as part of the IPO allows us to implement the equipping plan when the company is in the best financial readiness since the period of the coronavirus, and will enable its financing In relation to revenues in 2023. The effects of the war on the second quarter are evident and we still see a significant increase in revenues compared to the previous quarter, which is due to an increase in the occupancy rate."