El Al Israel Airlines Ltd. (TASE: ELAL) saw its loss narrow in the first quarter of 2012 on reduced operations. The carrier reported that planes flew 9.8% less hours in the first quarter of 2012 compared with the corresponding quarter, while the number of seats offered was down 4.8%. Revenue rose to $429 million in the first quarter of 2012, up 1% from the corresponding quarter, while net loss narrowed to $23.5 million compared with $43 million in the corresponding quarter.
El Al also reported that the passenger-kilometer ratio (number of paying passengers times distance the plane flies) grew 0.7% and the rate of occupancy, which represents the efficiency index for aircraft fleet use, grew by 5.8% to 81.2%.
These figures and a reduction in the number of employees, the higher shekel-dollar exchange rate, and other savings and streamlining measures undertaken by El Al's management as well as income from hedging activities over jet fuel, which compensated for its rise in price, saw the company improve its gross profit compared with the corresponding quarter.
Events unrelated to operations also contributed to the improved financial performance in the first quarter of 2012. These included capital gains from the sale of aircraft equipment, recording an expense for a cargo suit in the first quarter of 2011 and a reduction in company tax, which all narrowed the loss.
El Al's operational loss narrowed to $24 million, 5.6% of revenue, in the first quarter of 2012, compared with $53.5 million, 12.6% of revenue, in the corresponding quarter of 2011.
El Al's market share fell from 38.2% to 36.6% in the first quarter of 2012.
El Al CEO Elyezer Shkedy said, "The 2012 first quarter results were influenced by the global crisis, the rise in fuel prices, and competition in the aviation sector. The company is continually adapting itself to the situation, reducing activities and streamlining measures."
Shkedy added that the company had reduced its workforce by 231, increased sale of tickets via the Internet by 30% and direct sales by 10%. He said that external consultants had been hired to help the company formulate its medium and long-term strategy and targets.
Published by Globes [online], Israel business news - www.globes-online.com - on May 24, 2012
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