ATW Daily News

El Al's first-quarter loss triples

Thursday May 29, 2008

Record revenue was not enough to offset a difficult economic environment and a one-time provision related to potential liability for anticompetitive cargo activities as El Al sank to a $49.9 million first-quarter loss that was more than three times the $15.3 million lost in the year-ago period.

Turnover rose 21% to a company record $471.5 million, but the $20 million provision announced this week (ATWOnline, May 28), plus what President and CEO Haim Romano called "the international crisis, the [69%] increases in fuel costs and the erosion of the exchange rates," contributed to the result. Passenger revenue was up 22% year-over-year and operating expenses climbed 23% to $416.6 million. Operating loss fell to $47.4 million from $10.6 million in the first three months of 2007.

Romano focused on the positive, claiming that the revenue increase was "an indication of El Al's ability to face the revolutionary challenges in the local and international aviation market." The company also incurred $9.1 million in registered financing expenses resulting from its transfer to international accounting standards.

Capacity and passenger numbers were up during the quarter but load factor fell 1.7 points to 80.7%, El Al said. Romano said the carrier is counting on further passenger growth, while CFO Nissim Malki said its "strong cash situation indicates its stability and its ability to face the difficulties of this challenging period." It operates 36 aircraft to approximately 40 destinations.

by Brian Straus

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