El Al Airlines 2Q profit slides, set to receive new aircraft
El Al Israel Airlines on Wednesday reported a 53% drop in quarterly profit due to higher salary and jet-fuel expenses ahead of the start to modernizing its fleet with new aircraft.
Israel’s flag carrier said it earned $16.4 million in the second quarter, down from $35m. a year earlier.
Overall expenses rose 5%, mainly on higher wages, while jet-fuel costs grew 6.2%.
El Al had posted loses in the two prior quarters after its bottom line was hurt starting in the fourth quarter from a pilots’ protest. The airline in December signed a deal with its pilots to end a year of protests that led to flight cancellations, delays, higher costs and angry passengers.
This month, El Al is set to receive a new Boeing 787-9 aircraft, the first of 16 Dreamliners that will be delivered through 2020 to replace its aging long-haul fleet, which the airline hopes will win back customers lost to competitors.
During the second quarter, El Al paid an advance of $24m. for Dreamliners expected to join its fleet in 2018.
El Al said it submitted a request with the antitrust commissioner to approve a planned purchase of smaller rival Israir.
“The transaction is an important step in implementing El Al’s long-term strategy for expanding and diversifying the range of products and services offered by the company and will allow us to increase the group’s revenue and accelerate the company’s growth,” El Al chief executive David Maimon said.
El Al is “continuing its efforts to cope with challenging market conditions,” he said.
Maimon said another strategic step was to expand its route network in North America. El Al will be launching nonstop flights between Tel Aviv and Miami in November.
On Monday, El Al signed a code-share agreement with Aeromexico as traffic between Israel and Mexico has grown at more than 10% a year in recent years.
El Al’s load factor rose to 84.3% in the second quarter, and its market share at Ben-Gurion Airport was 29.5%, down from 34.2% a year ago. (Reuters)