El Al Israel Airlines Ltd. (TASE: ELAL) will save $5.8 million in security costs, in its 2011 financials, after the cabinet today approved the agreement reached on airline security operations.
The agreement covers the continued provision of security services by El Al to Israeli airlines, and a gradual increase in the government's participation in the security costs for Israeli airlines, including El Al, from the current 60% to 65% for 2011, 70% in 2012, 75% when the open skies agreement with the EU is signed, and 80% when the open skies agreement comes into effect.
El Al said that with the cabinet decision, together with the signing of an agreement with the Ministry of Foreign Affairs, which regularized the employment of airline security staff, the terms for the agreement coming into effect have been fulfilled.
El Al has lately needed every dollar it can save (or add to its revenue), in the wake of its poor results in the past few quarters. The airline's profit was halved to $21 million for the third quarter of 2011 from $42.4 million for the corresponding quarter of 2010.
El Al lost $42 million in January-September, compared with a profit of $40.8 million for the corresponding period, partly due to the soaring price of jet fuel, and increased competition from foreign airlines.
El Al's share price rose 4.1% today to NIS0.64, giving a market cap of NIS 304 million.
Published by Globes [online], Israel business news - www.globes-online.com - on December 25, 2011
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