El Al President Elyezer Shkedy Today Presented the Financial Reports for the 2nd Quarter of 2013
El Al President Elyezer Shkedy Today Presented the Financial Reports for the 2nd Quarter of 2013
Profits for this quarter totaled about $3.7 million, compared to a loss of $6.1 million in the 2 nd quarter of 2012
Company revenues for the 2 nd quarter of 2013 totaled $529.7 million, compared to $516.8 million in the 2 nd quarter last year
The ratio of gross profits to turnover increased from 15.1% to 15.5% and totaled $82.0 million compared to $78.1 million in the parallel quarter of last year
Cash flow from Company activities during the 2 nd quarter of 2013 increased to about $47.8 million, compared to $14.1 million in the parallel quarter of last year
The EBITDA in the current quarter totaled about $31.9 million with a ratio to turnover of about 6.0%, compared to $29.7 million in the parallel quarter of last year
On the reporting date the Company's cash balances, cash equivalents and short-term deposits totaled about $121.9 million
Direct internet sales during the reported quarter increased by about 23% in comparison with the parallel quarter of last year
Passenger load factors during the 2 nd quarter of 2013 totaled about 82.4%, unchanged from the parallel quarter of last year
El Al maintained its market share during the quarter, with a slight increase from 33.7% to 33.8% (in the 2 nd quarter of 2012).
Operating expenditure during this quarter increased by only about 2% in spite of increased activity operation, and totaled $447.8 million compared to $438.7 million in the parallel quarter of last year.
As at 30 th June 2013 equity stood at $107 million.
LOD, Israel--(BUSINESS WIRE)-- Elyezer Shkedy, El Al's President & CEO: "The Company continues to match its activities to the realities of the market place and thus continues to become more efficient. During the 2nd quarter of 2013 the Company increased the number of available seats for sale by 7% compared to the parallel quarter of last year, while maintaining a similar level of expenditure and a reduced number of employees. Efficient use and operation of the Company's aircraft brought about passenger load factors of about 82.4%.
"The Company reports a profit as well as positive cash flows, while it continues with its investment plans, including payments for purchases of new Boeing 737-900 aircraft as part of a business transaction for the purchase of six aircraft with options for two more.
"The first 737-900 of this contract will enter in service with El Al in October 2013.
"As part of the Company's overall business and operational assessment, El Al continues to reduce the number of aircraft types in operation. During the coming months we plan to remove the fleet of 767-200s, bringing the number of aircraft types we operate to four only (reduced from seven, that included our 747-200s, the 757s and the 767-200s).
"Our efforts to become more efficient and to stabilize additional growth engines have resulted in an increase of about 23% in internet sales over the parallel quarter last year.
"Our Frequent Flyer Club activities in Israel and worldwide have grown substantially. The Club already has 1.5 million members. We are planning on changes of the club's activities; the new format will shortly be brought to the Board of Directors for their approval.
"During the 2nd quarter, El Al continued to develop its strategic plans in response to world market trend in international civil aviation (including the open-skies policies). The Company is presently crystallizing new plans for short-haul flights using five 737-800s on routes still to be decided by the Company's Management. The aim is to integrate the new plans and schedules no later than the summer of 2014.
"Further strategic planning for Company activities has been approved and will be integrated later this year; the effective results will be felt in 2014.
"Further to the agreement that was achieved with the Government and the Ministry of Finance when the open skies policy into effect, the Government's portion for security expenditures for Israeli airlines was increased to 85%, starting 1.5.2013. The balance of the agreement will be implemented during 2013 and in early 2014, if the appropriate terms and conditions of the agreement are met.
"The adjustment of El Al's social behavior intensified. Over 1000 persons are continuously assessed for their effectiveness and they receive appropriate rewards. This change is an essential core element of the Company's growth.
"The FIMI Investment Company announced that they are giving the Company an extension of 45 days to finalize the conditions for the agreement. This period ends on 29.8.2013. They noted that the negotiations on a new comprehensive labor agreement are advancing slowly.
"I do hope that the Company employees grasp the importance of reaching a new agreement. I expect the members of the workers' committee to act responsibly and to take immediate action to formulate a new collective labor agreement, which, amongst other things, will enable FIMI to become an active investor in El Al; will allow the Company to advance and grow; and will enable the Company to face the open skies policies and the ever-increasing competition successfully.
"I'd like to thank the entire El Al family - on the ground, in the air, in Israel and abroad - who work so determinedly and devotedly to overcome the difficult challenges facing us. We are committed to providing our customers with the very finest services and products through our ongoing efforts to surmount and meet the challenging market conditions."
Nissim Malki, CFO, Vice President Finance: "During the 2nd quarter of 2013 we invested about $30 million in aircraft and equipment purchases, while also meeting repayment of loans of around $21 million.
"Cash flow from the Company's regular activities rose to about $48 million during the quarter; the highest in the last three years. This partial represents a notion of the advance sales from the coming busy summer season.
"This quarter's results reflect the implementation of the agreement with the Government concerning the increased governmental participation in the Company's security expenses - at this stage, 85% - beginning 1.5.2013. It should be noted that when the open skies agreement is implemented, the government's participation in the Company's security costs will rise to 97.5%.
"In addition, as we reported today, we have signed an agreement to purchase aircraft, with excellent conditions. As part of the Company's activities in seeking financing for aircraft purchases, Management has succeeded in reaching a financing agreement with a foreign bank which will offer a loan of $190 million to purchase four 737-900 aircraft which are due to enter into service beginning October 2013, to July 2014.
"The transaction is based on guarantees from EXIM, the Export-Import Bank of the United States. The transaction has innovative characteristics as a result of the issuance of the guarantees in American financial markets within a period of one year - a substitute for the loan from the foreign bank.
"This financing once again demonstrates the Company's special standing in international financial markets and its ability to create innovative and competitive financing solutions in place of standard conditions."
El Al Israel Airlines today published its financial reports summarizing the first half of 2013, as well as for the 2 nd quarter of the year. The main points follow:
Financial results for the 2 nd quarter 2013:
- Revenues for the present quarter totaled $529.7 million, compared to $516.8 million in the parallel quarter of last year, an increase of about 2.5%. Revenues from passengers increased by about 4%, the result of the increased number of passengers carried, after offsetting the drop in revenue per passenger-kilometer. Revenues from charter services dropped by about 12.9% as a result of reduced activity of our Sun D'Or charter subsidiary. Cargo revenues dropped by about 6.4% as a result of the reduction ton-kilometer revenues and the general reduction in cargo activities.
- Operating expenses in the 2nd quarter under review increased by about 2% to about $447.8 million, compared to $438.7 million in the parallel quarter of last year, largely as a result of increased volume of activities, the ratio of which on turnover during the 2nd quarter of 2013 dropped from about 84.9% to about 84.5% during this quarter. In addition to an increase in cost of salaries as explained further on, and changes in currency exchange rates, after offsetting the reduction in fuel expenses - as explained further on. During the 2nd quarter of 2013 the number of permanent and temporary employees in the Company was on average 5,906, compared to 5,938 in the parallel quarter of last year.
Aviation fuel costs during this quarter dropped by about $7.5 million compared to in the parallel quarter of last year, a reduction of about 4.0%. Market prices of aviation fuel during the quarter dropped by about 6.9% on average, compared to in the parallel quarter of last year. During the reported quarter the Company recorded costs of $3.9 million as a result of a decrease in fair value of hedging transactions that are not recognized for accounting purposes, compared to costs of about $6.5 million for similar hedging costs in the parallel quarter of last year. On the other hand the increased activities increased fuel costs during the quarter by about $5.8 million, while aviation-fuel hedging expenses grew by about $2.0 million during this quarter, compared to in the parallel quarter of last year ($3.8 million compared to $1.8 million). Fuel costs during the reported quarter totaled about 40.0% of our total operating expenditures, compared to 42.5% in the parallel quarter of last year.
Cost of salaries during the 2nd quarter of 2013 rose in comparison with the parallel quarter last year. Most of the increase is the result of the strengthening of the shekel exchange rate vis-à-vis the dollar, compared to in the parallel quarter of last year, plus the creeping increase in salaries.
- Gross profits for the quarter totaled about $82.0 million (a ratio of about 15.5% on turnover), compared to $78.1 million in the parallel quarter last year (a ratio of 15.1% on turnover).
- The operating profits were about $7.0 million compared to an operating profit of $2.4 million in the parallel quarter of last year.
- Financing. In this quarter the Company had net financing costs (after offsetting financing revenues) about $2.1 million, compared to net financing costs of $10.4 million in the parallel quarter of last year. The change is largely the result of the benefits of receipts from foreign currency hedging but that was set off by the increases caused by changes in exchange rates.
- Net profits for the 2nd quarter of 2013 totaled $3.7 million, compared to a loss of about $6.1 million in the parallel quarter of last year.
- Cash flow from regular activities during the 2nd quarter 2013 totaled about $47.8 million, compared to $14.1 million in the parallel quarter of last year. Cash flow for the first 6 months of the year totaled about $128.3 million.
- The EBITDA for El Al for the 2nd quarter of 2013 totaled about $31.9 million. Compared to $29.7 million in the parallel quarter of last year.
Results for the first half of 2013:
- Revenues for the first half of this year totaled about $960.7 million, compared to $945.9 million in the parallel quarter of last year, an increase of about 1.6%.
- Operating expenditure for the first half of 2013 totaled about $840.9 million, compared to $827.3 million in the parallel quarter of last year, an increase of about 1.6%. The change is largely the result of increased costs of salaries as explained below, while the ratio on turnover remains almost unchanged - about 87.5% in the reported half-year.
- Gross profits for the six months totaled about 12.5%, reaching about $119.8 million, compared to $118.6 million in the parallel quarter of last year.
- Operating losses for the first half of 2013 totaled about $29.3 million, compared to an operating loss of about $21.4 million in the parallel quarter of last year.
- Financing. In the first half of 2013 the Company reported net financing costs (after offsetting financing revenues) of about $9.1 million. This compares to net financing costs of about $18.5 million in the parallel quarter of last year. The change is largely the result of the benefits of receipts from foreign currency hedging but that was set-off by the increases caused by changes in exchange rates.
- Net losses for the first half of 2013 totaled about $28.8 million, compared to a net loss of about $29.4 million in the parallel quarter of last year.
- El Al's EBITDA for the first half year totaled about $20.7 million, compared to EBITDA of $33.1 million in the parallel quarter of last year.
- As at 30th June 2013 the Company's cash on hand, cash equivalencies and short-term deposits totaled $121.9 million. It should be noted that during the first half of 2013 the Company invested around $75 million in fixed assets, in accordance with the Company's multi-annual investment program, in addition to prior financing of the new 737-900s. The Company also repaid current loans totaling $42.1 million and obtained loans of $45.6 million, mainly for the purchase of fixed assets.
- Company equity, as at 30th June 2013 totaled $107 million.
Conference Call Details
On Thursday 15th August 2013, at 12:15 midday El Al's management will hold a conference call during which the Company's financial results for the 2nd quarter, and the first 6 months, of 2013 will be reviewed. The call conversation can be heard by dialing [+972] (0)3 918-0609. A recording can also be heard from 14:00 on the 15th August 2013 and until the 22nd August 2013, by calling  (0)3 925-5930.
About El Al
El Al Israel Airlines is Israel's national airline. In 2012 El Al's revenues totaled about $2.1 billion and the airline flew approximately 2 million passengers. Revenues for the first half of 2013 totaled about $960.7 million. El Al serves 38 destinations directly, and many other destinations around the globe through cooperation agreements with other airlines. The Company operates 37 aircraft, 21 of which are self-owned. El Al is Israel's leading cargo carrier. www.elal.co.il
Financial and operational highlights of the 2nd quarter 2013
Profit & Loss report (in millions of dollars)
|April-June 2013||April-June 2012||Change|
|Cost of Sales||(50,329)||(9.5%)||(53,090)||(10.3%)||2,761||(5%)|
|Managerial & General Expenses||(26,780)||(5.1%)||(22,873)||(4.4%)||(3,907)||17%|
|Other Net Revenues (Expenses)||2,085||0.4%||254||0.0%||1,831||721%|
|Profits (Losses) from regular operations||6,953||1.3%||2,391||0.5%||4,562||191%|
|Company's Share in Net Pre-Tax Profits, incl. Subsidiaries||163||0.0%||301||0.1%||(138)||(46%)|
|Pre-Tax losses on Revenues||5,044||1.0%||(7,664)||(1.5%)||12,708|
|Losses for this period||3,707||0.7%||(6,055)||(1.2%)||9,762|
|Jan-Jun 2012||Jan-Jun 2011||Change|
|Cost of Sales||(96,586)||(10.1%)||(101,462)||(10.7%)||4,876||(5%)|
|Managerial & General Expenses||(52,410)||(5.5%)||(47,547)||(5.0%)||(4,863)||10%|
|Other Net Revenues (Expenses)||(177)||(0.0%)||8,990||1.0%||(9,167)|
|Losses from regular operations||(29,338)||(3.1%)||(21,381)||(2.3%)||(7,957)||37%|
|Company's Share in Net Pre-Tax Profits, incl. Subsidiaries||261||0.0%||1,212||0.1%||(951)||(78%)|
|Pre-Tax profits on Revenues||(38,202)||(4.0%)||(38,676)||(4.1%)||474||(1%)|
|Losses for this period||(28,753)||(3%)||(29,350)||(3.1%)||597||(2%)|
|Integrated Report on Financial Affairs|
|(Millions of dollars)|
|Current assets||296||447||Current liabilities||725||946|
|Apr-Jun 2013||Apr-Jun 2012||Change|
|Thousands of Scheduled & Charter Passenger Segments (paying passengers)||1,152||1,074||7%|
|Millions of scheduled Revenue Passenger-Kilometers (RPK)||4,706||4,457||
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