The CEOs of Israeli airlines El Al, Israir and Arkia were summoned to a meeting with Israeli Minister of Economy and Industry Nir Barkat today due to a sharp increase in airfares. Israir CEO Uri Sirkis was the first to meet with Barkat this morning, followed by El Al CEO Dina Ben Tal Ganancia.
Ben Tal Ganancia and Barkat agreed that El Al will offer relatively cheap round-trip tickets to four destinations from which Israelis can fly on to other locations. The round-trip fares to the four destinations are Athens, Greece ($299), Larnaca, Cyprus ($199), Dubai, United Arab Emirates ($349) and Vienna, Austria ($349). These are flights that will be included in El Al’s schedule, with tickets selling at approximately these prices until the end of 2024.
El Al also promised to reduce prices on other flights where seats are available, of which there are likely not many due to the low supply and high demand from Israeli passengers.
In this way, Ben Tal Ganancia and Barkat have reached an agreement that will allow Israelis to access foreign vacations and business flights without the ministry having to intervene in the prices of El Al flights worldwide. Ben Tal Ganancia said: “We continue to work to increase the seat offer as much as possible and expand the flight schedule. This step will allow us to offer tens of thousands of seats at affordable, known prices in advance and provide a comprehensive offer for destinations that are connecting points to the different continents.”
El Al’s last quarter
Earlier this week, El Al surprised investors with excellent results for the second quarter of the year – $147 million in profit, up 84 percent from the first quarter of 2024 and, according to management, the “best quarter in its history.” This trend is likely to continue in the third quarter, after more and more foreign airlines recently suspended flights to Israel for fear of an Iranian attack.
Upcoming reports from El Al, controlled by Kenny Rozenberg, are expected to show equally strong profits. In the first half of 2024, El Al reported a roughly 40% jump in revenue to nearly $1.6 billion and net profit of $226 million, more than ten times the profit in the first half of the previous year.
The big winner is Rozenberg. About four years ago, after the outbreak of the Covid pandemic, El Al’s continued existence was threatened when scheduled flights by all airlines worldwide were suspended. The auditors even assigned a “going concern” rating to the company’s reports. The state came to El Al’s aid with hundreds of millions of dollars, along with capital injections from the new majority owner Rozenberg, to bridge the liquidity gaps and enable the airline to meet its obligations despite the crisis.
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Since the beginning of 2024, El Al’s share price has risen by 66% and the company’s market capitalization is NIS 2.4 billion. Over the past three years, the share price has risen by 120% as it recovered from the Covid crisis. However, over the past five years, compared to the pre-Covid period, the share price has recorded a negligible return of 2%.
Published by Globes, Israel Business News – en.globes.co.il – on August 21, 2024.
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