El Al Lost $49.3 Million in 2011


elalEl Al Israel Airlines reported a loss of $49.3 million in 2011 compared with a profit of $57 million in 2010. The airline blamed the loss on the sharp rise in the price of aviation fuel due to higher oil prices on world markets. Revenue in 2011 was $2 billion, down 3.6% from 2010. Gross profit fell 28% to $278 million and the airline also reported an operational loss of $43 million compared with an operational profit of $88 million in 2010.

El Al said that, “The main reason for the financial results was a rise in operational expenditure due higher aviation fuel costs and as a result of losing market share due to growing and aggressive competition caused mainly by the implementation of the open skies policy by the Israeli government.”

The company stressed that signing the “open skies” agreement, “might adversely influence Israeli airlines due to an additional strengthening of competition, and an increase in carriers and capacity that the agreement will bring, and the lack of ability of Israeli companies to realize equal aviation rights from the agreement.”

El Al failed to stem the rise in operational costs and revenue fell. The carrier said that its streamlining plan had only been partially implemented and thus 2012 will be a troubled year too. “Ongoing sharp rises in aviation fuel as seen in the first quarter of 2012 combined with the global economic crisis and a competitive environment will weigh on the company’s revenue policy and present challenges at the start of 2012 and possibly during the rest of the year.

In the fourth quarter of 2011, El Al reported a loss of $7.7 million compared with a profit of $16.2 million in the corresponding quarter. Operational profit fell 63% to $8.1 million.

Despite the difficult situation the company finds itself in, the carrier’s senior management enjoyed a good year. El Al CEO Eliezer Shkedi earned NIS 2.85 million (NIS 166,000 per month), while five other senior managers raked in a total of NIS 8.55 million. El Al chairman Amikam Cohen earned NIS 1.28 million in 2011 in a part-time job.

{Yair Alpert-Matzav.com Israel/Globes}