Higher salary expenses, the strengthening of the shekel against the dollar, a rise in jet fuel prices caused by an increase in oil prices, and a drop in the number of operating days because of the Jewish holidays in September led to a steep fall in the profits of El Al Israel Airlines Ltd. (TASE: ELAL) in the third quarter and the first nine months of the year.
El Al today reported that its revenue was down 2.7% to $626 million in the third quarter. Operating profit fell 28% to $69 million, while net profit was off 29% to $49 million.
El Al's revenue in the first nine months of the year was steady at $1.58 billion. Its operating profit in this period plunged 47.5% to $62 million, and its net profit plummeted 58% to $35 million.
Volatile trading in the share continued today. After jumping 9.5% yesterday, the share is up again today.
Together with Poju Zabludowicz, Tamar and David Borowitz control El Al through Knafaim Holdings Ltd. (TASE: KNFM). David Maimon, El Al's CEO for the past 18 months, resigned two weeks ago.
Psagot analyst Noam Pinko wrote, "The number of passengers declined by 13% in September, due to the timing of the holidays (the number in October rose 16%). The number of passengers also fell in July because of prolonged maintenance of airliners. At the same time, the 3% fall in revenue was less than the 5.9% decrease in revenue passenger kilometers (RPK) because of a 1.4% increase in return per kilometer."
Pinko added that in the bottom line, "The results were reasonably good, and matched our expectations. In the fourth quarter, we expect to see an increase in revenue compared with the corresponding period quarter last year because of a rise in the number of passengers, but also a drop in profit caused by a greater than expected increase in oil prices."
Published by Globes [online], Israel Business News - www.globes-online.com - on November 22, 2017
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