EL AL Chairman of the Board Professor Israel (Izzy) Borovich and EL AL President Haim Romano today presented the airline’s financial report for the third quarter of 2007
Record revenues registered, since the airline’s founding in 1948 – a growth of 27% in airline revenue, totaling 566.7 million dollars, as compared with 447 million dollars in the parallel quarter last year
Gross profit grew by approximately 96% over the parallel quarter last year and totaled about $151.3 million.
Operational profits totaled some $63.8 million, as compared to a profit of $8.5 million last year
Cash flow from ongoing activity in this quarter totaled about 74 million dollars
The airline’s profit before taxes totaled 51.0 million dollars as compared with 1.6 million dollars in the parallel quarter last year.
After tax, profits totaled approximately 41.2 million dollars as compared with a profit of 1.4 million dollars in the parallel quarter last year.
EL AL Chairman of the Board Professor Israel (Izzy) Borovich noted that “the financial results for the quarter reflect a significant growth for the airline in all areas, as implementation of the economization plan continues. EL AL continues to realize its vision of leading the aviation market in Israel and being the first and preferred choice for all air traffic to and from Israel. Management continues to implement the “EL AL 2010” commercial plan, in which many actions are taken to implement its growth policies. I believe that the airline’s economic strength will continue, enabling us to invest in order to lead the company to fulfillment of its vision.”
EL AL President Haim Romano noted that “EL AL’s profitability is a result of resolute actions that led to an increase in all of the company’s growth engines; it led to record growth in revenues and an increase in load factor. All of these came about in this quarter as a result of implementation of the airline’s stated policy of making the airline attractive to customers, meticulously improving service and product, offering a broad range of fares, suiting timetables to passengers’ needs and increasing frequencies according to market demand. The company invested approximately one billion shekels in expansion and innovation, more than in any period since privatization. We completed the purchase of two new aircraft and introduced them into service. We invested 20 million dollars in new seats and are at the peak of our renewal momentum.”
Today EL AL published its financial reports for the third quarter of 2007.
Revenues for the quarter totaled approximately $566.7 million, as compared with $447 million last year, an increase of 27%. The increase in revenue stems from a number of factors: an increase in the number of passengers as compared to the parallel quarter last year when Israel was in the midst of the Second Lebanon War; a 15% growth in passengers per kilometer flown by the airline; a rise in revenue per passenger per kilometer; an increase in revenues from cargo; and from leasing planes and providing maintenance services to other airlines.
Operational expenses in the quarter totaled $415.4 million, representing 73.3% of turnover, as compared with $369.7 million which comprised 82.7% of turnover last year. The increase in operational expenses stems from increased activity and from the rise in fuel costs which is a significant component in the airline’s expenses. Jet fuel expenses in the quarter rose to $154.4 million, as compared with $131.9 million in the same quarter last year. Hedging activity undertaken by the company saved $5.1 million in fuel costs in the third quarter. Jet fuel expenses in the quarter under review constitutes 27.2% of the turnover as compared with 29.5% in the parallel period last year. Additionally, devaluation of the dollar in relation to the shekel and to the euro added approximately $6 million to expenses in the quarter under review as compared with the parallel quarter last year.
The gross profit totaled $151.3 million, 26.7% of turnover, as compared with $77.3 million last year, which was 17.3% of turnover. The increase in gross profit and its percentage of turnover stems mainly from the rise in the passenger/kilometer ratio and from improved operational economization steps, which are reflected in increased load factor.
The operational profit totaled $63.8 million, 11.3% of turnover, as compared with an operational profit of $8.5 million last year, 1.9% of turnover. In the current quarter managerial and general expenses declined, due to continued implementation of the streamlining plan undertaken by the company.
Net profit before taxes in this quarter totaled $51.0 million as compared with a profit of $1.6 million in the parallel quarter last year.
Net profit totaled $41.2 million as compared with a profit of $1.4 million in the parallel quarter last year.
Cash balance for the company as of September 30, 2007 totaled some $265.4 million, after returning some $81 million in loans during the first nine months of 2007 and payments totaling $221 million for fixed assets, as compared to a balance of $143.4 million as of September 30, 2006.
Equity as of September 30, 2007 totaled some $312.7 million, in comparison to $214.1 million on December 31, 2006. The growth is attributable to profits in the period and to exercising state and company options.
Cash flow from ongoing activity for the quarter totaled some $74.1 million, in contrast to a negative cash flow of $4.7 million in the parallel quarter last year. The growth in cash flow from ongoing company activity derives mainly from profits in the period.
Professor Borovich thanked airline President Haim Romano, employees and managers for meeting the goals and targets that were set. He added that all of those involved acted with resolve to improve company profitability, increase its revenues, reduce its expenses and thus contribute to today’s positive results.
Attaining these results, especially in a period of strong competition provided by the many foreign airlines flying to Israel, which have increased their seating capacity to both direct and continuation destinations, is proof of the commitment and joint effort of airline employees to lead the company upward, to realize its vision and to be the first and preferred choice in air traffic to and from Israel.
EL AL President Haim Romano said: “In the third quarter, the airline achieved the goals it had set for itself of increasing revenue, reducing expenses and properly managing the company’s assets, in order to continue to be a profitable company with a sound financial base, that provides attentive, quality service that benefits its customers, employees and stockholders, while continuing with its program of investments. The airline invested in both infrastructure and service in order to improve its competitive capabilities. It upgraded the seats in its aircraft, brought two new Boeing 777 aircraft into service at an investment of about a billion shekels, upgraded to the Amadeus system for reservations, and much more.
“In the third quarter, the company improved to record revenues of $566.7 million, which reflect a 27% growth over the parallel quarter last year. The results for this quarter are also remarkable in comparison to the same quarter in past years which, traditionally, is the strongest of the aviation year. The company recorded a growth in number of passengers; it offered 4% more seats and utilized its aircraft with great efficiency. In this quarter its load factor rose to about 87%, and it recorded unparalleled growth in revenue since its founding in 1948. All this was done despite growing competition, which was characterized by a rise in the number of seats offered by foreign airlines, and in cargo activity. I want to emphasize that these impressive results were attained despite the many challenges that were faced: increased competition, soaring jet fuel prices, which added $12 million to company expenses over the parallel quarter last year, and changes in the exchange rate that added about $6 million to company expenses.
“The airline continued its economization program, cutting out inefficient and unprofitable routes such as Turkey and Cyprus, because of high security expenses, and adding frequencies to destinations with greater demand. As part of the streamlining program the company reduced its average personnel roster by about 153 positions, in comparison to the parallel quarter last year, a reduction that was reached in cooperation with the employees. We are making serious efforts in our work relations so as to arrive at a positive agreement with the employees’ representatives in the near future.
“We continue to invest heavily in resources and thought in order to maintain EL AL’s status as leader in the field. We are continuing to implement the “EL AL 2010” strategic plan, and many steps have been taken to implement our growth policy. Among others, the airline took possession of two new Boeing 777 aircraft in the summer, ‘Sderot’ and ‘Kiryat Shmona’. These planes are outfitted with new seats and a sophisticated entertainment system. The airline inaugurated its new Business Lounge at JFK, in cooperation with Bank Leumi, and is continuing its strategic partnerships in matters of service. Special emphasis was placed on dealing with the business sector and premium passengers by adding frequencies to destinations in demand, and much more.”
EL AL President Romano thanked management and employees for their joint efforts in attaining the results. He added that this achievement belongs to all the employees in the company, who gave their all to bring about these results.
Haim Romano summarized: “We believe that the steps that have and are being taken will continue to yield results in the foreseeable future. Continued growth in revenue and in passenger activity, coping with the exogenous effects of rising fuel prices and continued devaluation of the dollar, streamlining, and steps to constantly improve the product and ensure excellence in service, all testify to the ability of EL AL’s management and employees to deal successfully with growing competition, in order to preserve the company’s position as leader in the aviation branch.”
Nissim Malki, Vice President Finance stated: “We are pleased to announce this quarter continued growth in the company’s activity and profitability. These were achieved by reducing the rate of operating expenses in the turnover, which has been on a consistently downward trend thanks to the strict policy of resource management implemented by the company for streamlining and economizing. It should be noted that the company’s financial soundness can be seen in its high cash reserves and positive cash flow, which in this quarter totaled some $74.1 million. We also invested $159 million in new aircraft and paid back loans during the quarter totaling approximately $61 million.”
About EL AL
EL AL Israel Airlines is Israel’s national carrier. EL AL has annual revenues of about 1.8 billion dollars and it carries approximately 1.8 million passengers annually. The airline flies directly to more than 38 destinations around the world and to many additional destinations by means of partnership agreements with other airlines. It operates 37 aircraft, of which it owns 30. EL AL is the leading airline in the cargo market in Israel. It is active in the charter flight market by means of its subsidiary, Sun D’Or.
The airline is marking its 59th year of service.
BreuerPress-info
