Elyezer Shkedy, El Al President & CEO, today presented the Company’s financial results for the first quarter of 2012.
A reduction of 45% in El Al’s losses:
Losses for the first quarter dropped by $ 23.5 million, compared to a loss of $42.9 million in the parallel quarter last year.
Company revenues during the first quarter of 2012 totaled $429.1 million, an increase of $3.9 million compared to the parallel quarter of last year.
During the period under review gross profits grew by about 85% to $40.4 million (a ratio of about 9.4% on turnover) compared to $21.8 million in the parallel quarter last year (at a ratio of about 5.1% on turnover).
Load factors on passenger flights averaged 81.2%, compared to average load factors of 76.8% in the parallel quarter last year, a 6% increase.
Cash flow from regular activities during the quarter totaled $65.0 million, compared to a cash flow of $56.7 million in the parallel quarter last year
- El Al’s market share dropped from 38.2% to 36.6% during the quarter, and increased by about 6.7%, from 34.3% in the fourth quarter of 2011.
- Operating expenses for the quarter under review totaled $388.7 million compared to $403.4 million in the parallel quarter last year, a drop of about 4%.
- Shareholders’ equity at 31st March 2012 totaled $142.0 million, compared to $162.0 million on 31st December 2011.
- Salary costs for the first quarter of 2012 were reduced in comparison to the same period of 2011, by about $7.4 million. The reduction resulted from the devaluation of the average exchange rates of the shekel-dollar values; from the reduction in the workforce by 231 employees; and from reduced activities.
- Gross profits for the present quarter totaled $40.4 million (a rate of 9.4% on turnover), compared to $21.8 million in the parallel quarter last year (a ratio of 5.1% on turnover).
Elyezer Shkedy, El Al President and CEO: “The financial results for the first quarter of 2012 were influenced by the world financial crisis, the increased fuel prices and the growing competition in aviation markets. The Company continues to adjust to the changes in the environment; adjusting activity and continuing to become more efficient. During this quarter the Company reduced activities compared to the parallel quarter last year. Weighted flying hours were reduced by about 9.8%, while the number of seats offered by the Company was reduced by 4.8%.
Improved aircraft operations by the Company led to a 6% increase in load factors – to 81.2%.
“We continue to work resolutely to match the Company’s situation to commercial reality and to face the increasing competition and to the changes in the local and worldwide aviation market. Within this framework we are working towards a reduction in expenditures. The Company’s operational management was more efficient, as expressed in the reduction in expenditure.
“As a result of our efficiency efforts, and the expansion and allocation of additional growth engines, we recorded a sharp increase – about 30% – in internet ticket sales, and an approximate 10% increase in direct sales. Overall, the Company showed a 20% increase in direct sales channels.
“Over the past few months the Company has persevered in consolidating a medium- and a long-term business strategy, which should reflect the Company’s plans and strategies for the coming years. At the same time it will be consistent with the existing conditions, as well as to worldwide market-driven developments in the field of international civil aviation. To this end, the Company has engaged the services of Shaldor Ltd, a company with expertise in the field of strategy-building processes. To manage the entire process, Shaldor is assisted by outside international aviation experts, as well as by professionals from within the company.
“Choosing and then approving the final strategic plan is expected to be concluded in the coming months, to be followed by a detailed work plan.
“I would like to thank everyone in El Al – on the ground, in the air, in Israel and abroad – for your determination and devotion in surmounting the difficult challenges we had to face this past quarter. We are resolutely determined to continue to offer our customers services and products of the highest possible standards. We are ready for the effort to face the market conditions and challenges of the complex competition.”
Important financial and operational topics from the 1st quarter 2012.Financial reports for the 1st quarter of 2012:
- Revenues for the 1st quarter of 2012 totaled $429.1 million, compared to $425.2 million in the comparable period last year, an increase of 0.9%. Revenues from passengers increased by about 7%, while cargo revenues dropped by about 12%, as a result of the worldwide drop in airfreight usage.
- Operating expenses in the quarter under review totaled $388.7 million compared to $403.4 million in the parallel quarter last year – a drop of about 3.6%. This was largely the result of the reduction in flying hours during the quarter and the drop in cost of salaries. The drop was also influenced by the Government’s increased participation in El Al’s security costs and by the average exchange rates of the shekel and the euro vis-à-vis the dollar, during the period. The market price of aviation fuel rose by an average of about 9.1% compared to the parallel quarter last year, while the Company’s effective cost price, after hedging activity, rose by about 8.8%. During the current quarter the Company recorded hedging returns on jet fuel prices of about $14.5 million, which amount is reflectedin the profit and loss accounts (compared to $15.5 million in the parallel quarter last year). The increase in the fair value of hedging transactions which are not recognized for accounting purposes, but which are reflected in the profit and loss accounts, reduced the costs of aviation fuel for the quarter by about $2.6 million, while the reduction in activity reduced expenditures by a further $13.7 million.
- Gross profits for the quarter totaled $40.4 million (a ratio of about 9.4% on turnover), compared to $21.8 million in the parallel quarter last year (a ratio of 5.1% on turnover).
- Salary expenses for the 1st quarter of 2012 dropped in comparison with the parallel period last year, by about $7.4 million. Most of the reduction stemmed from the devaluation in average exchange rates of the shekel-dollar value, the reduction in employee numbers and reduced Company activity.
- Cost of sales totaled $48.4 million compared to $44.9 million in the parallel quarter last year, an increase of about 8%. The rate on turnover rose from 10.6% to 11.3%.
- Managerial and general expenses for the quarter totaled $24.7 million, compared to $24.3 million in the parallel quarter last year, an increase of about 2%. The rate on turnover did not change.
- Operating losses totaled $24.0 million, compared to an operating loss of $53.5 million compared to in the parallel quarter last year.
- Financing. During the present quarter the Company had net financing expenses of about $8.2 million, compared to net financing revenues totaling $1.2 million in the parallel quarter last year. The change resulted mainly from shekel/dollar hedging expenses, from exchange rate changes and from an increase in LIBOR interest rates.
- Losses for the 1st quarter of 2012 totaled $ 23.5 million compared to a loss of $42.9 million in the parallel quarter last year.
- Cash flow from regular activities during the quarter ending on the 31st March 2012 totaled $65.0 million, compared to a cashflow from regular activities of $56.7 million in the parallel quarter of last year.
- As at the 31st March 2012 the Company’s cash on hand, cash equivalencies and short-term deposits totaled $144.2 million. It should be noted that in the 1st quarter of 2012 the Company invested $16 million in fixed assets, and repaid long-term current loans to the value of $23.2 million.
- Shareholders’ equity of the Company at 31st March 2012 totaled $142 million, compared to $162 million as at 31st December 2011. The reduction in the Company’s shareholder equity resulted mainly from the losses for the period.
Nissim Malki, C.F.O VP Finance said: “In the first quarter of this year we see the first signs of successful managerial activities in matching supply and demand. The results are reflected in the significant increase in load factors, the reduction in flight hours and in adjusting resources.
“There are positive indications that our increased efficiency is resulting in : the reduction in our workforce and fruitfully operating expenses. These contributed to doubling the rate of gross profits to turnover during the period under review.
“The Company met all its obligations, including repayment of $23.2 million in loans and an investment in fixed assets to the value of $16.0 million.
“Cash flow from regular activities during the quarter reflects correct and responsible financial management, and will enable the Company to carry out its missions and undertakings during 2012”.
Important financial and operational topics from the 1st quarter 2012.
Profit & Loss Report (in millions of dollars) Q1 2012:
|Thousands of Dollars
||% on Turnover
||Thousands of Dollars
||% on Turnover
||Thousands of Dollars
|Cost of Sales
|Managerial & General Expenses
|Other Net Revenues (Expenses)
|Profit on Regular Activities
|Company’s Share in Net Pre-Tax Profits, incl. Subsidiaries
|Pre-Tax Profit on Revenues
|Tax on Revenues
|Profit (Loss) for Period