Israel’s flag carrier grew third-quarter revenue 18% to a record $1.27 billion. But fuel costs, a stronger shekel and the return of foreign competitors are starting to weigh on its margins.
Foreign carriers and low-cost airlines are returning to Tel Aviv, and the pressure on fares is growing © Mena Today
Israel’s flag carrier grew third-quarter revenue 18% to a record $1.27 billion. But fuel costs, a stronger shekel and the return of foreign competitors are starting to weigh on its margins.
El Al Israel Airlines has delivered another strong quarter, helped by its dominant position at Ben Gurion Airport, where it holds a 38% market share.
Revenue for July to September, traditionally the busiest period of the year, reached a record $1.27 billion. Net profit, however, fell 14% to $172.2 million.
EBITDAR rose 3% to $367 million. The company said it achieved this despite higher fuel prices and the shekel’s strength against the dollar, which together added about $135 million in costs.
Operating cash flow climbed 27% year on year to $161 million. Advance bookings hit a record $1.1 billion at the end of the quarter, up 16%.
From near-insolvency to a cash cushion
The results confirm a remarkable turnaround. A few years ago, El Al was losing money and edging toward insolvency.
The Swords of Iron war changed its fortunes. With most foreign airlines suspending flights to Israel, El Al dominated the market and built up a cash surplus of $910 million (NIS 2.8 billion).
That advantage is now fading. Foreign carriers and low-cost airlines are returning to Tel Aviv, and the pressure on fares is growing.
For the fourth quarter, El Al expects “strong demand for the group’s flights will continue, alongside intensifying competition.” It plans to increase seat capacity by 10% to 14%, with fares only 1% to 4% higher than a year earlier.
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