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Elyezer Shkedy, President and CEO of EL AL, presented the financial reports for the third quarter of 2012
EL AL:
Net profits for the 3rd quarter grew by 79% to about $37.4 million, compared to about $20.9 million in the 3rd quarter of 2011

Revenues for the 3rd quarter of 2012 totaled about $605.8 million,
compared to $601.9 million in the parallel quarter of 2011,an increase of about 4%

Operating expenses for the present quarter dropped by about 6%, totaling $458.0 million, compared to $488.9 million in the parallel quarter of last year

  • The ratio of gross profit on turnover rose from 18.8% to 24.4% and totaled about $147.8 million, compared to $112.9 million in the parallel quarter of last year
  • The EBITDA for the 3rd quarter was about $94.7 million, with a ratio over turnover of about 15.6%, compared to $52.3 million and a ratio over turnover of 8.7% in the parallel quarter of 2011
  • The rate of direct sales via the internet rose during the quarter under discussion by about 23%, compared to in the parallel quarter of 2011
  • Passenger load factors on flights rose by about 2.5% and reached 84.5%, compared to load factors of 82.4% in the parallel quarter of 2011
  • El Al’s market share during the 3rd quarter of 2012 was about 31.9%, compared to 31.5% in the parallel quarter of 2011
  • Cash flow from regular activities during the quarter totaled $13.3 million and $92.5 million in the first nine months of 2012
  • The Company’s cash on hand, cash equivalencies and short-term deposits totaled $116.1 million
  • Capital on 30th June 2012 totaled about $168.6 million, compared to about $159.7 million as at 31st December 2011


Elyezer Shkedy, El Al President and CEO: “During this quarter El Al continued to deal with the reality of a world economy in turmoil, which also affects the aviation industry. As a result, all the airlines in the world take painful measures to become more efficient, sometimes dismissing thousands of employees.

In addition, we had to cope with the complex geopolitical conditions in the Middle East, which is particularly evident in these very days.

Yet in spite of all this, we present financial results that reflect ongoing improved efficiency and tight control over expenses – resulting in the improved results of this quarter.

During the 3rd quarter of 2012 the Company continued on its way to higher efficiency, so as to match itself to current economic reality; El Al succeeded in maintaining a lower expenditure level. The number of Company employees dropped by an average of about 126 compared to the parallel quarter of 2011.The Company’s efficient operational management resulted in a drop in operational expenditure by about 6.3% compared to the parallel quarter of 2011.

El Al is currently facing the process of a new ‘open skies’ government policy. While El Al does not oppose the agreement, we believe it must be suitable and worthy. All we ask is that we be allowed to compete on equal and evenhanded terms, so that the competition is fair and realistic. At this time, and under the present conditions, the basic circumstances for fair and honest competition do not yet exist.

As part of the Company’s strategy to develop and institutionalize direct marketing and distribution channels, we managed to report a significant growth about 23% – in internet sales.
In addition, El Al continues with its advanced computerized technological development in various fields of Company activity (commerce, sales, customer care and finances).
El Al’s Frequent Flyer Club gained its millionth member during the 3rd quarter of 2012. Over the first nine months of 2012, over 138,500 new members joined. This represents an increase of about 90% over the parallel quarter of 2011.

In July a new service level was added to flights – “Economy Plus”. This new service level enhances the range of Company products on offer, and provides an appropriate and elite service to a wider range of passengers. During the first phase the service was provided on our Boeing 747s. Right now the changeover is being added to El Al’s 767s. At a later stage the Economy Plus service compartment will also be added to the fleet of 777s.

The Company is in the process of re-equipping our aircraft fleet – both wide- and narrow-body aircraft – with newer models. The Company purchased two additional narrow-bodied 737-900s from the Boeing company (making a total of six aircraft purchases). (The arrival of the first one has been advanced, and will now come into service with El Al in October 2013. The Company is presently in the process of purchasing wide-body aircraft as well.

At the same time we are removing older aircraft from service, and reducing the number of aircraft types we operate. Right now the last 757 has just ended service with El Al.
As part of our efforts at reducing expenditure and becoming ever more efficient, we are in the final stages of adding winglets to our 737 fleet.

We are continuing to consolidate our medium- and long-term business strategy, which will reflect the Company’s targets and strategies for the coming years, while matching ourselves to the current situation and to the developments in international aviation markets around the globe. The Company is presently resolutely preparing a focused and detailed program in various fields.
I’d like to thank all the Company’s employees and Board members, on the ground, in the air, in Israel and abroad, who, with devoted determination worked to overcome the difficult and complex challenges that faced us in this quarter."

We are committed to offering our customers the finest possible service and products, and to constantly work to overcome the difficult, challenging market conditions.”

El Al Israel Airlines today presented its financial results for the first nine months of 2012, and for the 3rd quarter of the year. The following are the main points:

Results for the third quarter of 2012:
  • Revenues for the present quarter totaled $605.8 million, compared to $601.9 million in the comparable period last year, an increase of about 1%. Revenues from passengers grew by about 3.6%, largely the result of the increase in yield per passenger-kilometer, but to some extent offset by the influence of a devaluation of the euro vis-à-vis the dollar exchange rate. Cargo revenues dropped by about 16.5% and totaled $43.7 million, compared to $52.3 million in the parallel quarter of 2011. This was the result of the reduction in ton-kilometers flown.
  • Operating expenses in the quarter under review dropped by about 6.3% to about $458.0 million, compared to $488.9 million in the parallel quarter last year. The ratio of operating expenses on turnover dropped from about 81.2% during the 3rd quarter of 2011 to about 75.6% in the current quarter. Most of the reduction in operating expenses stemmed from the reduction in activities, the reduction in cost of salaries and of aviation fuel, and the changes in currency exchange rates. Most of the reduction in cost of salaries stemmed from the creeping devaluation of the shekel in relation to the dollar, as well as the reduction in the number of employees. During the 3rd quarter, the average number of Company employees, permanent and temporary, was 6,136, compared to 6,262 during the parallel quarter last year.
  • During the present quarter, the Company’s costs for aviation fuel decreased by about $14.1 million compared to in the parallel quarter of 2011, a ratio of about 6.9%, largely as a result of the drop in activities, while market prices of aviation fuel were almost unchanged compared to the parallel quarter of 2011. During this quarter the Company registered hedging returns for aviation fuel totaling $5.2 million, which were reflected in the profit & loss reports. (In the parallel quarter last year the Company reported hedging returns of about $16.3 million.)
  • Gross profits for the quarter rose by about 30.9% and totaled about $147.8 million (a ratio of about 24.4% on turnover), compared to $112.9 million in the parallel quarter last year (a ratio of 18.8% on turnover).
  • Operating profits totaled $62.5 million, compared to $25.0 million in the parallel quarter of last year.
  • Net profit for the 3rd quarter of 2012 totaled $37.4 million, compared to $20.9 million in the parallel quarter of 2011.
  • Cash flow from regular activities during the 3rd quarter of 2012 totaled $13.3 million.
  • El Al’s EBITDA for the 3rd quarter of 2012 totaled about $94.7 million, compared to $52.3 million in the parallel quarter of 2011.
  • Load factors on the Company’s aircraft during the present quarter were about 84.5%, compared to 82.4% in the parallel quarter of 2011.
Results of the first nine months of 2012.
  • Revenues for the first nine months of 2012 totaled $1,551.7 million, compared to $1,557.2 million in the parallel quarter of 2011.
  • Operating expenses for the first nine months of 2012 totaled about $1,285.6 million, compared to $1,362.5 million in the parallel period of 2011, a drop of about 6%. The change resulted mainly from the reduction in the cost of salaries, the lowered cost of aviation fuel, as well as from a reduction in activities during the reported period, and from the devaluation of the shekel vis-à-vis the dollar compared to in the parallel period of 2011.
  • Gross profits for the first nine months of 2012 grew by 37% to about $266.1 million, compared to $194.7 million in the parallel quarter last year.
  • Profit on operations during the first nine months of 2012 totaled about $40.7 million, compared to losses on operations of $52.00 million during the first nine months of 2011.
  • The net profit for the first nine months of 2012 totaled $7.7million, compared to a loss of $42.00 million in the parallel quarter of 2011.
  • El Al’s EBITDA for the first nine months of the year grew by $127.3 million, compared to the EBITDA totaling about $28.8 million in the parallel quarter of last year.
  • Cash flow for the first nine months of the year totaled about $92.5 million.

Additional data
  • As at the 30th September 2012 the Company’s cash on hand, cash equivalencies and short-term deposits totaled $116.1 million. It should be noted that in the 3rd quarter of 2012, the Company invested about $14.2 million in fixed assets, in accordance with the Company’s multi-annual investment program, and repaid current loans to the value of about $21.1 million. The Company also received loans of about $30 million, mainly to finance the purchase of fixed assets.
  • The Company’s capital as at the 30th September 2012 stood at around $169 million.


Nissim Malki, CFO and Vice President Finance: “Throughout the 3rd quarter of 2012 the Company maintained its improvement in each of the expense components, so that the gross profit for the quarter improved by about $35 million, and its ratio over turnover improved from about 18.8%, to about 24.4%

To concerning revenues, it should be noted that the 3rd quarter of last year included flights in Sao Paulo, where the revenues were low relative to the length of the flight. The management’s decision to utilize the aircraft and the resources that had been used to serve that destination, to other more profitable destinations, is reflected in the positive outcome for this quarter.

Concerning expenditures, the Company succeeded in integrating a cost-effective work program, with expenditure about 6% lower than the parallel quarter of 2011. Naturally this also contributed to the improved results.

The Company’s activities concerning financial hedging continued to provide satisfying results in reducing the effects of fluctuations in fuel prices.

The business results in this report include a capital loss of about $4.5 million from the sale of two Boeing 757-258ER aircraft. (This sale was done as part of our strategy of reducing the number of aircraft fleet types

Cash flow accruing to the Company from regular activities over the first nine months of the year amounted to about $93 million. The Company invested about $55 million in fixed assets, and also repaid loans of about $78 million.

The results of the quarter and the first nine month of the year clearly reflect a systematic and wide improvement of the major components of the company's profit and loss Assuming that external geopolitical or exogenous factors will not negatively and substantially impact the future bottom line, I believe that we are gradually progressing in the right direction”

Financial and operational highlights for the 3rd quarter 2012:
Profit & Loss report (in millions of dollars)

 
Publish Date 03/12/2012