EL AL Signs its Biggest Boeing Order Ever as Profits Soar

Israel’s national carrier confirmed a major new deal with Boeing on Thursday. EL AL Israel Airlines will buy up to 31 Boeing 737 Max planes as part of a wider fleet overhaul.

The agreement is notable for both parties. Boeing won a new customer for its troubled 737 Max program, while EL AL signed the single largest order in its 76-year history. 

The contract will see 20 737 Max join the company’s Tel Aviv-based fleet, with options for up to 11 more. Even if the additional jets aren’t realized, the deal is worth around $2 billion at list prices. Deliveries are expected from 2027.

EL AL already operates an all-Boeing fleet, comprising around 44 aircraft. Of these, 24 are the previous generation 737-800 and -900 type. The remaining 20 planes are larger 777 and 787 Dreamliners, typically deployed on long-haul routes.

EL AL’s Wartime Strength

The developments come at a highly sensitive time for Israel and the wider region. Late last month, major U.S. airlines were among those to suspend flights to and from Tel Aviv amid escalating tensions. 

Most international carriers halted all flights to the city after the start of the Israel-Gaza war in early October 2023. Not all airlines have resumed services as the conflict continues. Among those that have returned, short-notice cancellations and temporary route suspensions can be frequent.

This has resulted in EL AL being the sole – if not the more reliable – option for many nonstop routes. As a result, Israel’s national airline is earning some of its highest profit margins ever. In the first quarter of 2024 – traditionally a weak one seasonally for the Israeli market – EL AL reported a towering 16% operating margin. 

Only 3.5 million passengers flew to the country during the quarter, versus a forecasted 5.6m. But EL AL itself carried 1.4m of those 3.5m, after expecting to fly just 1.1m passengers. Air cargo operations were also strong. 

EL AL said it expects its Q2 performance to be even better. The airline has yet to publish its financials for the April to June second quarter.

EL AL Reinforces Boeing Partnership

Thursday’s 737 Max news follows a more modest deal between the airline and plane maker earlier this year.

In March, EL AL agreed terms for three additional 787-9s with options for up to six more. Boeing delivery schedules suggest the airline will receive one of the new Dreamliners before the end of 2024. A further two will follow via aircraft lessors. 

Responding to the 737 Max agreement, EL AL CEO, Dina Ben-Tal Ganancia said: “EL AL has a central role in ensuring open skies for Israel. The implementation of our strategic plan – which aims to expand the fleet, increase the value proposition for customers, and increase capacity and seating – will ensure a strong and growing company for many years to come.”

The closing of the deal follows a market filing in June that revealed EL AL had entered exclusive negotiations with Boeing and aircraft lessors. European manufacturer Airbus also tendered for the project.