GAZA war is visible in the weak results of the Israir airline: revenues of $390 million for 2023

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by Ifi Reporter Category:Communication Apr 1, 2024

Israeli airline Israir has reported weakened financial results for the fourth quarter of 2023, largely attributed to the ongoing war and geopolitical crises affecting the region. The airline revealed that the majority of its operations during October-December consisted of rescue flights and designated flights for war-related situations, significantly impacting its revenue and profitability.

Israir disclosed that its revenue cycle took a hit of $45-55 million, with gross profit affected by $7-9 million and net profit by $5-7 million. The airline attributed these losses to various factors, including travel warnings issued by the National Security Headquarters and economic challenges exacerbated by the war's wide mobilization of reserves and restrictions on gatherings.

As a response to the adverse effects of the conflict, Israir implemented several adjustment measures, including reducing flight schedules, focusing on HUB destinations, and freezing lease deals. Despite these efforts, about a fifth of the company's employees were either recruited or evacuated from their workplaces.

The airline warned of potential continued impacts on its performance in the first quarter as long as the conflict persists, with plans to deepen adjustment strategies accordingly. Israir also highlighted changes to its planned flight schedules for Passover and summer in anticipation of shifts in demand due to the war and geopolitical crises.

Additionally, Israir provided insights into its negotiations to purchase the Czech airline Smartwings, revealing that talks were halted in February due to the Middle East's geopolitical situation. The airline remains hopeful for renewed negotiations in the second quarter of 2024.

Despite the challenges, Israir reported record revenues of approximately $390 million for 2023, representing a 9% increase compared to the previous year. However, the fourth-quarter revenues saw a sharp decline of 48% due to the impact of the war, constituting only 12% of the total annual revenues.

While the incoming tourism sector experienced an 82% decrease in fourth-quarter revenues, Israir noted a slight increase in annual revenues in this segment. Overall, the tourism and international aviation sector saw a 12% increase in annual revenues, partially offsetting the fourth-quarter losses.

Israir's gross profit for 2023 increased by 7% compared to the previous year, although operating profit decreased by 10% due to higher sales and marketing expenses. Despite these challenges, the airline remains focused on navigating the turbulent environment and adapting its strategies to sustain its operations amidst ongoing uncertainty.

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