Rising competition and higher jet fuel costs sent operating costs of El Al Israel Airlines Ltd. (TASE: ELAL) soaring, resulting in a more than doubling of its net loss for the first quarter of 2011, while revenue was flat.
Revenue was $425.2 million for the first quarter, compared with $423.2 million for the corresponding quarter of 2010. Operating costs rose to $403.4 million (95% of revenue) for the first quarter from $363.6 million (86% of revenue) for the corresponding quarter.
Operating loss tripled to $53.5 million for the first quarter from $14.7 million for the corresponding quarter, and net loss rose to $42.9 million from $16.5 million.
El Al said that the number of seats offered by all airlines to and from Ben Gurion Airport was 10.9% more in the first quarter compared with the corresponding quarter, while passenger traffic increased by only 4.8%. El Al's share of traffic at the airport fell 5% to 38.2% of all passengers in the first quarter from 40.2% in the corresponding quarter, and average flight occupancy fell to 76.7% from 81.2%.
Israel's air cargo fell 4% to 77,900 tons in the first quarter from 81,400 tons in the corresponding quarter. Imports fell 12% to 41,700 tons, but exports rose by 7% to 36,200 tons. El Al's share of air cargo rose 13% to 35.7% in the first quarter.
Cash flow from operations rose to $56.7 million for the first quarter from $53.9 million for the corresponding quarter, and the airline's cash and deposits rose to $182.3 million at the end of March from $151.9 million a year earlier.
El Al CEO Eliezer Shkedi said, "We are implementing a cost-cutting program to adjust the company to the business climate in Israel and globally. Measures include reducing the fleet of gas-guzzling planes and applying innovative technologies in our possession. We are taking measures to encourage excellence and improve sales in Israel and internationally in order to boost revenue during the rest of the year while coping with the intensifying competition."
El Al's share price fell 3% in morning trading today to NIS 1.07, giving a market cap of NIS 547 million.
Published by Globes [online], Israel business news - www.globes-online.com - on May 25, 2011
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