Israir Airlines, a prominent player in the aviation and tourism sector, has reported impressive financial results for the second quarter of 2023. The company's operating profit surged by 14% in comparison to the same quarter in 2022, marking a substantial uptick in profitability. The growth can be attributed to several key factors that have shaped the market landscape.
One of the significant drivers of Israir's improved performance is the favorable shift in the tourism and aviation market tide. Coupled with a drop in jet fuel prices, these factors have significantly impacted the company's bottom line. The successful implementation of advanced flight pricing technologies has also contributed to the surge in profitability, allowing the airline to optimize its revenue streams.
A notable achievement for Israir was the exceptional enhancement in profitability on the Eilat route. This route saw a noteworthy improvement, further bolstering the company's overall performance. As a result, the airline's operating profit reached an impressive figure during the second quarter of 2023.
Mr. Uri Sirkis, the CEO of Israir, expressed optimism regarding the future trajectory of the company. He predicted that the third quarter of 2023 would likely yield record-breaking results, underlining that sales in August alone surpassed those achieved throughout the entire second quarter.
Israir's revenues during the second quarter of 2023 marked a robust increase of 24% when compared to the same period in the previous year. The total revenue figure amounted to $105 million, a substantial growth attributed to various factors. The rise in demand, coupled with the drop in jet fuel prices, played a pivotal role in driving revenue expansion. Furthermore, the company's sixth Airbus aircraft, acquired at the end of 2022, led to an increase in seat supply. This, combined with a 3% rise in Israir's vacation package prices and the introduction of six new destinations, including Istanbul, Chania, Naples, Lisbon, Malaga, and Tirana, significantly contributed to the overall revenue growth. Revenues from Israir's international operations exhibited substantial growth, soaring by 30% to reach $90 million.
Israir's successful revival extended to its inbound tourism business, managed through the Diesenhuis company. Revenues from this sector recorded a remarkable 63% increase during the second quarter of 2023 compared to the corresponding period in 2022, reaching $21 million.
On the domestic front, Israir's activity, concentrated on the Eilat route, faced a temporary setback. Revenues from this sector experienced a 27% decline in the past quarter in comparison to the same period in 2022, amounting to $4 million. However, the company's strategic decision to focus on peak demand hours and its flexibility in managing its Airbus aircraft fleet between international and domestic operations contributed to the overall profitability.
Israir's gross profit displayed a healthy growth of 25% in the second quarter of 2023, amounting to $14 million, which accounted for 12.9% of the turnover. This increase was attributed to factors such as the decrease in the average price of jet fuel, resulting in a savings of $900,000. Additionally, the shift from a gross loss to a gross profit in domestic operations further positively impacted gross profitability. The implementation of the Quick-Lizard software for dynamic pricing also played a significant role by enabling the airline to adjust flight and holiday package prices based on demand, supply, and market competition.
Despite a 2% decrease in the average price for one-way flights to Eilat, Israir's operating profit witnessed a commendable 14% growth compared to the same period in 2022, reaching $3 million. This growth occurred despite a notable 62% rise in sales and marketing expenses, primarily due to the costs associated with opening new routes. Administrative and general expenses also saw an increase of 16% to $6 million.
A crucial factor contributing to the enhanced operating profit was the shift from an operating loss of $300 thousand on the Eilat route in the previous year to an operating profit of $700 thousand during the second quarter of 2023. The international activity's operating profit increased by 5% to $4 million, despite a 30% jump in revenues. This could be attributed to investments made in opening new routes.
Israir concluded the second quarter of 2023 with a 22% decrease in net profit compared to the corresponding period in 2022, resulting in a net profit of $5 million. This reduction can be attributed to net financing expenses of $2 million, a shift from net financing income of $4 million during the same period in the previous year. This change was influenced by shifts in currency exchange rates. Notably, Israir's operational activities generated a cash flow surplus of $11 million during the second quarter of 2023, a decrease from the $14 million surplus achieved during the same period in 2022.
With a strategic focus on market dynamics, efficient fleet management, and innovative pricing technologies, Israir Airlines has managed to capitalize on the evolving landscape of the aviation and tourism sectors, showcasing its ability to adapt and thrive in challenging conditions. As the industry continues to rebound, Israir remains poised for continued success.