El Al: Exceptional Q2 2024 Performance with $147 Million Net Profit and Strategic Expansion Plans

El Al Airlines has released its financial results for the second quarter of 2024, showcasing an outstanding performance that aligns with earlier projections and underscores the airline's robust recovery and growth trajectory. The company reported revenues of approximately $839 million, marking a significant 33% increase from the $630 million recorded in the same quarter last year. This surge in revenue is attributed to a $29 million boost in cargo operations and strong passenger demand

A critical metric that highlights El Al's operational success is the 8% increase in Available Seat Kilometers (ASK), reflecting the airline's continued expansion of production capacity post-pandemic, bolstered by the integration of wet-leased aircraft. Revenue per Available Seat Kilometer (RASK) saw a remarkable 24% rise, driven by a substantial increase in occupancy rates, which soared to 92% from 87% in the corresponding quarter of 2023.

The airline's EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent) reached $281 million in Q2 2024, representing a 72% growth compared to $163 million in the same period last year. This robust profitability is further accentuated by a reduction in net financing expenses, which decreased to $23 million from $31 million, largely due to increased interest income from deposits amid a significant rise in the group's liquidity.

El Al’s net profit for the quarter was an impressive $147 million, a 2.5-fold increase from the $59 million reported in Q2 2023. This profit surge is primarily driven by increased ASK, enhanced RASK, and elevated cargo revenue.

The company also reported a substantial improvement in cash flow from operations, which amounted to $391 million, a 3.3-fold increase from $119 million in the corresponding quarter. This growth is attributed to higher profitability and improved working capital, significantly influenced by advance ticket sales for peak demand seasons.

El Al's financial position has notably strengthened, with equity attributable to shareholders reaching $201 million as of June 30, 2024, compared to a deficit of $209 million as of December 31, 2023. This transition to positive equity is the result of robust net profits, a capital raise of approximately $140 million, and the exercise of warrants totaling $39 million.

Strategic Developments and Future Outlook

El Al's CEO, Dina Ben-Tal Gnansia, highlighted the airline's strategic initiatives during Q2, emphasizing the strong demand for El Al flights despite the resurgence of foreign airlines in Israel. "We have intensified our flight offerings and made significant commercial, operational, and logistical adjustments," she stated. El Al has also expanded its frequent flyer program, which now boasts approximately 3.1 million members, and continues to forge partnerships with major international carriers, including Air France, Delta Airlines, KLM, and Virgin Atlantic.

In a strategic move to modernize its fleet, El Al recently signed an agreement with Boeing to purchase dozens of aircraft to replace its narrow-body fleet. This deal represents the largest strategic equipment acquisition in the company's history and aligns with global ESG standards, reflecting El Al's commitment to environmental responsibility. "These new aircraft will enable us to offer an advanced, innovative service experience, positioning El Al alongside the world’s leading airlines," Gnansia added.

El Al’s CFO, Yankla Shahar, emphasized the financial resilience achieved through a recent capital raise, which included a package of shares and warrants worth approximately $140 million. "This financial foundation, the strongest since the pandemic, supports our strategic re-equipment plan and sets the stage for revenue growth of approximately $1 billion by the time of its completion," Shahar noted. Despite the ongoing challenges posed by the current geopolitical situation, El Al remains poised for continued growth and expansion.

This report underscores El Al's successful navigation of a challenging environment, reinforcing its status as a key player in the global aviation industry.