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El Al Q4 Loss Widens As Low Cost Competition Bites

Published on Mar 18 2019 9:30 AM in General Industry tagged: Trending Posts / El Al

El Al Q4 Loss Widens As Low Cost Competition Bites

El Al Israel Airlines has reported a wider quarterly loss, citing higher fuel costs and increased competition that has shrunk its market share.

Israel's flag carrier said it had made a loss of $32 million in the fourth quarter, compared with $30 million a year earlier. Revenue slipped 3.7% to $493 million, while operating costs fell 4.4% to $445 million.

Jet fuel costs rose nearly $15 million in the quarter.

Stiff Competition

El Al has met with stiff competition from rivals including Turkish Airlines, Aeroflot, easyJet and WizzAir, which offer lower fares even though some flights require a layover. It also competes with Delta, United and Air Canada on North American routes.

During 2018, El Al's market share at Ben-Gurion International Airport fell to 25% from 28%.

CEO Gonen Usishkin said that the continued implementation of an open sky policy with Europe and the Israeli government's decision to allow Air India to fly over Saudi Arabian airspace, while El Al cannot, weighed on its bottom line.

Fleet Overhaul

"With the replacement of [Boeing] 767 and 747 aircraft with [787] Dreamliner planes, the company will be able to realise the operational efficiency potential ... and contribute significantly to improving the product," Usishkin said.

El Al is banking on a more than $1 billon overhaul of its long-range fleet to win back customers while also revamping its short-haul fare structure. By the end of 2019, it expects to add another six Boeing 787 aircraft to bring the total to 14 by the end of the year.

It said it planned to continue to expand its route network in 2019 with routes to San Francisco, Las Vegas, Manchester and Nice and to Chicago in 2020, while also refurbishing its 777 and 737 aircraft.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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