Transport Airlines

El Al Airlines pegs quarterly loss on rising competition and conflict

May 27, 2013 7:16 am

Skift Take

Politics are keeping El Al out of the three major alliances; a bias the airline says keeps it from competing with European carriers. What El Al needs is an alliance similar to the Qatar-Emirates tie-up.

— Samantha Shankman

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Christoper Bowns  / Flickr

El Al Airlines at Warsaw Chopin Airport. Christoper Bowns / Flickr

El Al Israel Airlines said its first-quarter net loss widened, hurt by a military conflict in the fourth quarter as well as increased competition and higher operating costs.

Israel’s flag carrier said on Monday it had a quarterly net loss of $32.5 million, compared with a loss of $23.3 million a year ago.

Revenue rose to $431 million from $429.1 million. Revenue from passengers increased 2 percent while revenue from its cargo business fell 11.5 percent.

Operating costs rose 1 percent to $393.1 million as its jet fuel expenses grew by 4.8 percent.

El Al is implementing a plan to lower costs and reduce the size of its staff, Chief Executive Elyezer Shkedy said.

In response to trends in global markets, El Al’s board has approved the start of short haul flights using four Boeing 737-800 jets beginning no later than the summer of 2014. The destinations have yet to be determined.

Its load factor – a measure of seats sold – rose to 81.7 percent from 81.2 percent, while its market share at Ben-Gurion International Airport slipped to 34.7 percent.

El Al is controlled by Knafaim Holdings with a 39 percent stake.

Last month the FIMI fund agreed to invest up to $75 million in El Al in return for up to 47 percent of the carrier. The deal is subject to the signing of a new labour agreement that is acceptable to FIMI, Israel’s largest private investment fund.

Reporting by Tova Cohen.

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