El Al Airlines Calls For Financial Aid As It Records Quarterly Net Loss
Israeli airline El Al has called for more financial aid from the government to help it weather the effects of the Delta variant of COVID-19 as it recorded a narrower quarterly net loss than the year ago period on an improvement in air travel.
El Al, which has new ownership and management, has reported losses for three years and racked up debt to renew its fleet which has reached 45 planes at an average of 10 years old.
It was hit hard after suspending scheduled passenger flights in March 2020 at the outset of the COVID-19 health crisis when Israel, like other countries, closed its borders to most foreigners, compounding its financial woes.
In the April-June quarter, El Al laid off 1,900 employees, nearly one-third of its staff, as part of a recovery plan mandated by the government to receive a $210 million bailout package.
It recorded a net loss of $80.7 million, compared with a loss of $104.7 million a year earlier. Revenue rose 47% to $222.6 million, while jet fuel expenses increased to $44.8 million from $21.4 million.
Although small numbers of foreign tourists were allowed to enter Israel starting in June, El Al said it was operating at 30% of its potential while there has been an 80% drop in the number of passengers at Ben Gurion Airport near Tel Aviv.
Chief Executive Avigal Soreq noted that the Delta variant has forced the airline to again adjust its expenses to the level of activity.
"We also need an additional assistance package from the state, in view of the new flight restrictions. This is similar to El Al's competitors, who receive subsidies from their governments, which gives them an unfair competitive advantage," Soreq said.
Israel's finance ministry did not immediately respond to a request for comment from Reuters.
El Al's load factor rose to 67% in the quarter from 38% a year ago, while its market share reached 30%.
Israel is now requiring all citizens, vaccinated or not, to quarantine when returning from almost all countries, while banning travel to "red" countries -- Spain, Mexico, Brazil, Turkey, Georgia and Mexico.
"Despite the collapse in the number of passengers at Ben Gurion Airport, we managed to stabilise our activities," Soreq said, citing cost-cutting measures.