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El Al announces best annual financial results in five years

EL AL, the national airline of Israel, continues its profit trend, recording its best annual results in five years…

EL AL, the national airline of Israel, continues its profit trend, recording its best annual results in five years. The carrier`s annual profit of $33.1 million for 2004, covering January through December, is an increase of 421%, compared to a $6.4 million profit in 2003. The profit growth marks an important year for Israel`s national carrier, as it successfully completed a privatization process and is now traded on the Tel Aviv Stock Exchange.

EL AL`s cash flow in 2004 was higher than ever, reaching approximately $175 million and the overall cash balance at the end of the year was $153 million. The carrier`s annual revenues showed an increased of 19%, to a record total of approximately $1.4 billion from passenger and cargo traffic, as compared to revenues of approximately $1.16 billion in 2003. This growth is attributable to an increase of 15% in the number of passengers flying EL AL plus an increase of 17% in revenue from cargo business.

The increase in the airline`s record revenue was achieved despite a steep upsurge in competition in the skies and the rising cost of fuel, which raised EL AL`s expenses by approximately $67 million in 2004. The strengthening of the Shekel and Euro in relation to the dollar also led to an additional $6 million expense for EL AL.

I am extremely proud to head this competitive commercial company which has completed the privatization process and is today presenting such impressive results, proof that we will continue to thrive as the national carrier of Israel, stated Prof. Israel (Izzy) Borovich, Chairman of the Board of EL AL Israel Airlines. This success is a result of determined action by continuing to maximize passenger satisfaction as well as create added value for our investors. These impressive achievements are, without a doubt, a result of the unstinting commitment and contribution of EL AL`s management and employees.

Upon announcing the financial results, Prof. Borovich thanked outgoing President Amos Shapira and congratulated incoming President Haim Romano for undertaking the challenge to continue to lead EL AL to profitability and expansion.

Borovich also announced that a new commercial strategy titled EL AL 2010 will be presented in mid-2005 and will encompass the airline`s plans for the future in regards to fleet renewal, destinations, and customer service.

Many factors in the growing North American market contributed to these positive financial results, including 11% more flights between North America and Israel in 2004 over 2003. We succeeded in our efforts to improve EL AL`s product and services, increase frequencies to various destinations, and coordinate aggressive marketing activities targeted to both passenger and cargo traffic, stated Michael Mayer, General Manager, North America, EL AL. The continued growth in market share indicates both public trust and loyalty to EL AL, which is why we implemented a revised and more user-friendly frequent flyer club in 2004, resulting in a dramatic increase in membership in this time period.

EL AL completed the privatization process in January of 2005 when it appointed a new Board of Directors, headed by Prof. Borovich. Knafaim Arkia Holdings, which operates a conglomerate of aviation, transportation and tourism companies, became the controlling shareholder of EL AL when it increased its holdings in the airline from 22% to 40% in December of 2004. This followed EL AL`s initial public offering on the Tel Aviv Stock Exchange in June of 2003. Knafaim Arkia Holdings has an option to purchase an additional 12% of shares by June 2007, raising its EL AL ownership to 52%.

Theodore Koumelis
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Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.