El Al Israel Airlines (TASE: ELAL) has become one of the most profitable listed companies in Israel in the past few years, thanks to its dominance at Ben Gurion Airport and its profitable routes to North America. Last year, El Al posted a record profit of $541 million, following a profit of $113 million in 2023. The trend continued in the first half of 2025, with a profit of $155 million; according to the company’s estimate, were it not for the war with Iran, the number would have been $100 million higher. The current quarter is also expected to be strong.
Despite the high profits, El Al is still not paying tax. In fact, "Globes" has found that the company has paid no tax since it was privatized in 2003.
The reason for this is the company’s heavy cumulative losses from previous periods, chiefly from the Covid pandemic period in 2021-2022, when it was on the point of collapse and had to obtain financial aid from the state. The aid consisted of hundreds of millions of dollars in loans, alongside an injection of capital by Kenny Rozenberg, who became the controlling shareholder at that time. El Al’s losses in those two years amounted to about $1 billion, on top of losses of about $250 million from previous years.
Close to covering the loss
Since then, however, the skies have cleared for El Al. The outbreak of the Swords of Iron war and the abandonment of Israel by foreign airlines, high fares, and extensive streamlining, have not only led to profits such as it has never seen before, but also to repayment of the state loans. The next step is to start distributing dividends of 30% of its profits, a move that the state approved earlier this year.
And what about paying tax? El Al states in its most recent financials that it is only $11 million away from covering the huge loss from the pandemic period. This does not mean, however, that it will start paying taxes soon. In its quarterly financials El Al does not specify the current size of its tax shield, but in its annual report for 2024 it mentioned tax losses of $166 million.
Since El Al is liable to pay companies tax at the regular rate of 23%, on the basis of the year-end figure, it still needs to recognize profits of $722 million before it starts paying tax, of which it has recognized over $160 million in 2025 to date, which leaves about $567 million that it need to earn to reach the tax threshold.
Despite its tax losses, El Al can distribute dividends. This is because the Companies Law (section 302) states that a company may make a distribution of "a profit balance or profits accrued in the last two years, whichever is the larger." A further criterion is that "there is no reasonable suspicion that the distribution will keep the company from meeting its existing and expected obligations when they fall due."
"There two test: profit, and solvency," explains Adv. Leor Nouman of S. Horowitz & Co. "The idea is to allow a distribution of profits by companies that that have cumulative losses from many years in the past, but are currently profitable and can meet the profit criterion and also pay their creditors."
As mentioned, El Al is controlled by Kennny Rozenberg, who has invested some NIS 840 million in the company since he took it over. El Al’s share price has risen by 380% in the past three years, giving the company a market cap of NIS 7.7 billion, so that his shares are currently worth NIS 3.5 billion, giving a net gain on paper of NIS 2.7 billion.
Published by Globes, Israel business news - en.globes.co.il - on September 2, 2025.
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