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EL AL CEO Elyezer Shkedy Presents Fourth Quarter and 2010 Financial Reports

Net profit totaled some $57.1 million compared to a loss of about $76.3 in the preceding year

Revenues for 2010 grew by 19%, totaling $1.97 billion as compared to $1.65 billion in 2009

Equity as of December 31, 2010 totaled $249 million, as compared with $124 million on December 31, 2009 – an increase of almost 100%.

Because the company showed a profit, and in keeping with the 2008 work agreement, EL AL will grant the company’s employees a salary increase of 3%.

EL AL CEO Elyezer Shkedy informed the airline’s Board of Directors that he has decided to transfer to the Fund for Excellence and People, to be established this year, 50% of his annual bonus for 2010, NIS 5.7 million.
This sum will be added to the NIS 2 million deposited in the Fund, as reported by the airline upon confirmation of the CEO’s appointment. 

EL AL’s market share was 37.1%, a drop of about 1% compared to 2009. Load factor was 81.6%, as compared to 81.0% in 2009, a rise of 1%. Overall load factor at Ben-Gurion Airport among scheduled foreign airlines was 76.7%.

Operational costs in 2010 totaled about $1,584.6 million, as compared to $1,444.3 million in 2009, a growth of about 10%. Operational expenses dropped from 87.2% to 80.3% of turnover.

Gross profit rose by 83% in 2010 to $387.7 million as compared to a gross profit of $211.6 million in 2009. This represented 19.7% of turnover as compared to 12.8% of turnover in 2009.

Cash flow from current activity in 2010 reached $203.3 million as compared to $22.4 million in 2009, a growth of 807%.

Equity as of December 31, 2010 was $249 million as opposed to $124 million on December 31, 2009, a growth of almost 100%.

EL AL CEO Elyezer Shkedy: “During 2010, EL AL stabilized and moved from a loss of $76.3 million to a profit of $57.1 million. The airline registered a 19% growth in revenues and significantly improved its cash flow. The commercial results are directly linked to our actions in several domains.

“During 2010, EL AL maintained a load factor of about 81% on its aircraft, and a market segment of about 37%.

“Cargo recorded a significant improvement of about 37% in revenues during the year.

“EL AL concludes 2010 with a strong cash flow from current activity, about $203.3 million, as compared to a cash flow of $22.4 million last year. This constitutes a stable base for continued advancement and development, and a significant cash surplus of about $167.3m, which will provide a good platform from which to exploit opportunities in the future and develop additional growth engines and sources of revenue.

“During the year, EL AL also dealt with its short-range fleet and equipped and renewed its aircraft for long-range planes. The company purchased a 747 passenger plane which arrived in February 2011, and during 2010 two leased aircraft joined the passenger fleet, a 767-300 and a 737-800, in addition to a 747-400 cargo plane. The airline also extended its leasing agreements for five additional aircraft.

“In February 2011, the airline signed an agreement with the Boeing Company for the purchase of four new advanced 737-900 aircraft that are expected to join the company’s fleet between 2013 and 2015. and  two additional aircraft of the same model for which we have a purchase option. Likewise, the airline received an option for two additional airlines of the same model. The EL AL Board of Directors approved this transaction yesterday

“At the same time, we are continuing to develop growth engines in maintenance, commerce, partnerships and tourism. During the year, the company signed a series of code share agreements with leading airlines to expand the number of our continuation destinations. Among these airlines are Jet Blue in the USA, enabling us to offer a wide choice of continuation destinations throughout the USA; S7 in Russia and Air China in China. We are in the process of arranging several other agreements.

“During the year, EL AL began operating 3 daily flights from Ben-Gurion Airport to Eilat. Since the airline began operations on this route, passenger traffic to Eilat increased. The airline operated about 95,000 flight segments of which internal traffic to Eilat accounted for approximately 16%.

In the second quarter, the airline faced a crisis caused by the cloud of volcanic ash that closed down air traffic to all of Europe. EL AL chose to operate an airlift from five airports in Europe for Israeli residents who wished to return home for the Memorial Day and Yom Haatzmaut holidays. For a full week we sent dozens of flights to wherever our aircraft could land and we succeeded in bringing all the passengers home without having to make any changes in ticket conditions.

After a long period in which no salary raises were given, this year all EL AL personnel will receive salary increments and a one-time bonus, thanks to the positive commercial results for 2010 and in keeping with the collective agreement.

“I would like to thank the entire EL AL family – on the ground, in the air and worldwide. Thanks to your competence, determination, commitment and concern, we succeeded in stabilizing the company and leading the company forward. Together we will continue to carry the airline to great achievements and develop a healthy future for the airline.”

Financial and Operational Main Points for 2010:

2010  2009   Change (%)
Revenue 1972.2 1655.8 19%
Gross Profit 387.7 211.6 83%
Operational Profit (Loss) 88.0 (75.0) ------
Net Profit 57.0 (76.3) ------
Cash Flow from Current Activity 203.3 22.4 807%
Market Share 37.1% 37.5% (1%)
Load Factor 81.6% 81.0% 1%


2010 Financial Results:
  • Revenue for 2010 totaled $1,972.2 million, as compared with $1,655.8 million in the previous year, a growth of about 19%. Revenue from passengers increased as a result of a growth in the number of passengers as well as in the yield per passenger kilometer. Revenue from cargo grew by 37% as a result of an increase in cargo volume and of yield per kilometer ton.
  • Operational expenses in 2010 totaled $1,584.6m, as compared to $1,444.3m the preceding year, an increase of about 10%. At the same time operational costs as a percentage of turnover dropped from 87.2% in 2009 to 80.3%. The main increase was in jet fuel which totaled $584.3m (representing 29.6% of turnover) as compared to $475.7m the preceding year (28.7% of turnover). Company expenditures for jet fuel grew, mainly because of the rise in jet fuel in 2010, relative to 2009, and an increase in operations. Jet fuel prices in the Mediterranean basin rose by an average of 28% over those in 2009, but the effective price for the airline – after hedging – grew by about 15%.
  • Gross profit for 2010 totaled $387.3m (representing 19.7% of turnover), as compared to $211.6m the preceding year (12.8% of turnover), a growth of about 83%.
  • Sales expenses totaled $214.8m in 2010 as compared to $183.0m in 2009, an increase of about 17%. At the same time, percentage of turnover decreased from 11.0% to 10.9%.
  • Administrative and general expenses totaled $96.2m in 2010, as compared to $88.6m in 2009, an increase of some 9%. At the same time, percentage of turnover decreased from 5.3% in 2009 to 4.9% in 2010.
  • Operational profit totaled $88m (about 4.5% of turnover), in contrast to an operational loss of $75m in the preceding year.
  • Net financing expenses for the year totaled $25.1m, as compared to $26.3m in 2009, a decline of about 5%. The drop is attributable mainly to the revenue from currency hedging.
  • Net profit for 2010 totaled $57.0m, compared to a loss of $76.3m for 2009.
  • Cash flow from current activity for the year ending December 31, 2010 totaled $203.3 million, as compared to a cash flow from current activity of $22.4 million for 2009.
  • As of December 31, 2010, company cash reserves, cash value and short term deposits totaled $167.3 million. In 2010, the airline invested about $47 million in permanent assets and repaid $78 million long-term loans.
  • Equity as of December 31, 2010, totaled $248 million, as compared to $124 million on December 31, 2009. The increase in equity is attributable mainly to the growth in capital fund for hedging cash flow, an increase in the fair value of hedging transactions recognized as defensive transactions, and net profit for the period.

Fourth Quarter Results:

Fourth Quarter

2010  2009   Change (%)
Revenue 492.0 413.7

19%

Gross Profit 98.2 51.1 92%
Operational Profit (Loss) 22.1 (31.8) -------
Net Profit 16.3 (29.0) --------
Cash Flow from Current Activity 20.0 16.3 22%
Market Share 38.2% 37% 3%
Load Factor 81.1% 81.2%

0%

  • Revenues in the fourth quarter of 2010 totaled $492 million, an increase of about 19% resulting from increased passenger and cargo revenues.
  • Operational Expenditures totaled $393.8 million (about 80.0% of turnover) as compared with $362.6 million in the parallel period the previous year (about 87.6% of turnover), a growth of about 9%. The main increase was due to higher jet fuel costs, resulting mainly from a hike in market costs and also from increased activities, as compared with the parallel period in the preceding year.
  • Gross Profit totaled $98.2 million (about 20% of turnover) as compared with $51.1 million in the parallel period of the preceding year (12.4% of turnover), a growth of 92%.
  • Operational Profit for the fourth quarter of 2010 totaled $22.1 million, as compared with a loss of $31.8 million in the parallel period in the preceding year.
  • Profit for the quarter totaled $16.3 million, as compared with a loss of $29 million in the parallel period last year.
  • Cash flow from current activity in the fourth quarter of 2010 totaled $20 million as compared with $16.3 million in the fourth quarter of the preceding year.

Nissim Malki, Vice President Finance said: “The airline shows an improvement in all components of the commercial product, in terms of growth in revenues (by 19%) as compared to the preceding year, net profit percentage of turnover from 12.8% to about 20%, and in other components, so that net profit for the period represented 2.9% of turnover in contrast to a turnover loss of 4.6% for 2009.
It should be noted that in this period the company paid back $80 million in loans to banks, invested $50m in permanent assets and ended the year with about $167 in cash reserves.
Two other measures indicating the airline’s strength were cash flow from current activity, which exceeding $200 million, and a doubling of equity from $124m to $248m.
There is no doubt that this was a year of growth and preparation for future momentum.”

 
Publish Date 27/03/2011