Dépêches

El Al: Company Revenues for 2011 Grew by 4%, to $2.4 Billion

Dépèche transmise le 22 mars 2012 par Business Wire

LOD, Israel--(BUSINESS WIRE)--Elyezer Shkedy, El Al (TASE: ELAL) President & CEO said: “This year, again, the Company faced the continued increase in fuel costs, which resulted in a 41% increase in aviation fuel prices. Successful hedging activities somewhat reduced the effect of price increases to a level of 18%, compared to the previous year.

“One of the Company’s growing sources of revenue is its website, which was upgraded. As a result, we saw an increase of about 20% in website sales, and an increase of about 5% in ticket sales through the Call Center.”

“We actively implemented a number of steps to reduce El Al’s expenses, including optimizing our aircraft fleet and re-examining our route structure and destinations. One of the results was stop flying to Sao Paulo, Odessa and Dnepropetrovsk. In tandem, we are continuing with our plans to reduce the number of aircraft types in our fleet, and are removing older aircraft from service. (A cargo Boeing 747-200 went out of service this past summer; two passenger 767-200s stopped flying at the end of 2011, and two leased 757s were returned to their owners). This will reduce the number of aircraft types from six to four.

“As part of the required preparations for 2012, the Board of Directors decided to cut back on the remuneration of the directors, by 20%. El Al’s CEO and the chairman of the Board also decided to waive 20% of their salaries. The vice presidents also waived 10% of their salaries, while divisional directors waived between 7.5% to 10% of theirs. Just recently, all personnel working on personal contracts within the Company waived between 3% to 7.5% of their salaries.

“During the third quarter of 2011 we reduced the number of employees by about 200. The Company continues to adjust and to be implemented in the near future.

“We expect to promote and be able to reduce El Al’s share of the cost of security arrangements, as a result of an agreement with the government of Israel. (Reducing the Company’s share of security costs to 30%, and in the future, possibly to 20%).

“In addition to reducing expenditure, we continue to institute and develop additional revenue sources, so that in the mid- and long-term, the Company will not be so dependent on fuel prices and on other external factors. This will also enable the Company to make good use of its comparative advantages, as compared to foreign airlines.

“In this regard, we are continuing to develop opportunities identified as new growth engines for the Company, in diverse significant areas. We are broadening our cooperation agreements with various other companies. During 2012 El Al signed a cooperation agreement with the Canadian airline WestJet, so as to extend the number of destinations we offer in North America. We also signed a code-share agreement with the Russian airline Aerosweet, and our code-share agreement with the Russian S7 was broadened.

“One of the Company’s growing sources of revenue is its website, which was upgraded. As a result, we saw an increase of about 20% in website sales, and an increase of about 5% in ticket sales through the Call Center.

“We are also expanding additional growth engines that will yield mid- and long-term revenues. These plans includes evolving the Frequent Flyer Club, both in Israel and abroad; developing international initiatives concerning cargo movements; analyzing the development of know-how in the fields of maintenance and security; and expanding sales opportunities in various fields of civil aviation, that are not directly related to flying.

“As for financial results: El Al’s revenues grew by 4% in 2011 and totaled $2.04 billion. The Company showed a positive cash flow that totaled $61.9 million, and a cash balance of $85.4 million. These figures are after repayments of due-date debts, and fixed-asset investments of $107 million. These are important parameters in the face of the challenges we had – and still expect to have – and the changes in local and world-wide civil aviation and the global financial crisis.”

Mr. Shkedy summed up: “We are committed to and ready for an ongoing difficult struggle to meet the adjustments to the Israeli and world economies, as well as the challenging market conditions and the stiff competition. We believe that El Al’s enduring, robust, stable financial condition, together with the effective efficiency steps we are taking, and our constant efforts to implement and impart the concept of service excellence into the mindset of all El Al employees, are the keys to maintaining El Al’s leadership status in the aviation world. During the past few months El Al has made major efforts to formulate a strategic plan, to be finalized very soon, regarding the Company’s structure. Implementing the plan will enable the Company to successfully meet the present and future challenges.”

Mr. Nissim Malki, Vice President Finance, noted: “This was yet another challenging year for world civil aviation in general and especially so for El Al. Some of the largest airlines in the world, such as Air Canada and American Airlines, reported financial and commercial losses, while most other airlines also reported erosion of their profits. Thanks to our hedging activities, the rising cost of aviation fuel only influenced El Al by an effective rate of about 18%, while the actual increase was about 41% in the cost of aviation fuel.

“We are preparing the airline to continue strengthening the Company’s sound foundations in the face of the challenges expected in 2012. We are becoming more efficient, reducing the types of aircraft in our fleet, and continuing our plans to invest in the Company’s growth potential.

“The first signs of more efficient operations can already be observed in the financial results for the fourth quarter – a reduction of about 200 people. We have also instituted agreements to extend the average duration of the Company’s bank loans.”

El Al Israel Airlines today presented the financial reports for the 2011 financial year and for the fourth quarter of 2011.

Herewith are the results:

• Revenues for this year totaled $2,043.2 million compared to $1,972.2 million last year, an increase of about 4%. Passenger revenues increased mainly as a result of the increased revenue per passenger-kilometer and from changes in exchange rates. Revenues from cargo operations increased by about 8%, as a result of the increased freight carried and the revenue per ton-kilometer.
• Operating expenses in 2011 totaled $1,764.9 million, compared to $1,584.6 million last year, an increase of about 11%. The ratio of operating expenditure on turnover rose from about 80.3% in 2010, to 86.4%. Most of the increase derived from aviation fuel, costs of which grew from an average of about 41%, compared to in 2010. Fuel costs totaled $686.4 million (representing about 33.6% on turnover), compared to $584.3 million last year (29.6% on turnover). It should be noted that in 2011, as compared to in 2010, Company hedging activities reduced the effective price of aviation fuel to an 18.1% increase only.
• Gross profits for this year totaled $278.3 million (a ratio of about 13.6% on turnover), compared to $387.7 million last year (a ratio of about 19.7% on turnover).
• Cost of sales totaled $215.9 million in 2011, compared to $214.8 million in 2010, an increase of about 0.5%. The ratio of cost of sales on turnover in 2011 totaled about 10.6%, compared to about 10.9% in 2010.
• Managerial and general expenses in 2011 totaled $97.4 million, compared to $96.2 million in 2010, an increase of about 1%. The ratio of these expenses on turnover dropped by about 4.8%, compared to 4.9% in 2010.
• Losses on operations totaled $43.3 million (a ration of about 2.1% on turnover), compared to a profit on operations of $88 million last year (4.5% on turnover).
• Net financing revenues. Total net financing income this year totaled $0.3 million, compared to net financing costs of $25.1 million last year. The reduction stems mainly from hedging of currency exchange rates, and from the differences in these exchange rates.
• Net loss for 2011 totaled $49.4 million, compared to profits of about $57 million in 2010.
• Cash flow from regular activities for the year ending 31^st December 2011 totaled $61.9 million, compared to a cash flow from regular activities of $203.3 million in 2010.
• As at 31^st December 2011, the Company’s cash on hand, cash equivalencies and short-term deposits totaled $85.4 million. In 2011 the Company invested $107 million in fixed assets, and repaid long-term loans to the value of $87 million.
• Shareholders’ equity at 31^st December 2011 totaled $162 million, compared to $248 million as at 31st December 2010. The reduction in the Company’s shareholder equity resulted mainly from the reduction in the equity fund through hedging activity for cash flow, as a result of the drop of their mark to market due. and from the losses for 2011.

2011 Fourth Quarter Results

• Revenues for the 4^th quarter of 2011 totaled $485.4 million, an increase of about 1%, compared to in the comparable period last year. Net revenues from passengers increased by about 1.5%, while cargo revenues dropped somewhat because from June 2011, only one cargo aircraft was in operation.
• Operating expenses totaled $402.4 million (a ratio of about 82.9% on turnover) compared to $393.8 million in the parallel quarter of 2010 (a ratio of about 81.9% on turnover) – an increase of about 2.2%. This was largely the result of increased expenditure on aviation fuel, because of the increase in market prices compared to in the parallel period last year.
• Gross profits totaled $83.0 million, (a ratio of about 17.1% on turnover), compared to $87.2 million in the parallel quarter last year (a ratio of 18.1% on turnover).
• Profits on operations during the 4^th quarter of 2011 totaled $8.2 million, compared to $22.1 million in the parallel quarter last year.
• Losses for the quarter totaled $7.8 million, compared to profits of $16.3 in the parallel quarter last year.

Investor Conference

On Sunday 2^nd April 2012 El Al’s management will hold a conference with the capital market, at which the Company’s 2011 financial results will be reviewed. The conference will be held at the Visitors’ Center of the Tel Aviv Stock Exchange, 54 Ehad Ha’am Street, in Tel Aviv. For further information and to confirm your participation, please contact:

Moran Mazor on 03-9714612 or [email protected], or
Lior Gotlive on 03-7538867 or [email protected].

About El Al

El Al Israel Airlines is Israel's national carrier. In 2011 El Al’s revenues totaled about $2 billion. The airline flies about 2.1 million passengers a year. El Al serves about 34 destinations directly and many other destinations around the globe, through cooperation agreements with other airlines. The Company operates 37 aircraft, 25 of which are self-owned. El Al is Israel's leading cargo carrier.

Major financial and operational statistics for 2011
Profit & Loss Report (in millions of dollars)
		2011				2010				Change
		Millions of Dollars		% on Turnover		Millions of Dollars		% on Turnover		Millions of Dollars		% Change
Operating Revenues		2,043,174		100%		1,972,239		100%		70,935		4%
Operating Expenditure		(1,764,879)		(86.4%)		(1,584,557)		(80.3%)		(180,322)		11%
Gross Profits		278,295		13.6%		387,682		19.7%		(109,387)		(28%)
Cost of Sales		(215,926)		(10.6%)		(214,755)		(10.9%)		(1,171)		1%
Managerial & General Expenses		(97,392)		(4.8%)		(96,153)		(4.9%)		(1,239)		1%
Other Net Revenues (Expenses)		(8,293)		(0.4%)		11,269		0.6%		(19,562)		(174%)
Profit (loss) on Regular Activities		(43,316)		(2.1%)		88,043		4.5%		(131,359)
Financing Costs		(20,197)		(1.0%)		(35,911)		(1.8%)		15,714		(44%)
Financing Revenues		20,474		1.0%		10,849		0.6%		9,625		89%
Company’s Share in Net Pre-Tax Profits, incl. Subsidiaries		1,441		0.1%		45		0.0%		1,396		3102%
Pre-Tax Profit (Loss) on Revenues		(41,598)		(2.0%)		63,026		3.2%		(104,624)
Tax on Revenues		(7,797)		(0.4%)		(5,971)		(0.3%)		(1,826)		31%
Profit (Loss) for Period		(49.4)		(2.4%)		57,055		2.9%		(106,450)

		Q4 2011				Q4 2010				Change
		Millions of Dollars		% on Turnover		Millions of Dollars		% on Turnover		Millions of Dollars		% Change
Operating Revenues		485,420		100%		481,086		100%		4,334		1%
Operating Expenditure		(402,384)		(82.9%)		(393,847)		(81.9%)		(8,537)		2%
Gross Profits		83,036		17.1%		87,239		18.1%		(4,203)		(5%)
Cost of Sales		(55,263)		(11.4%)		(54,268)		(11.3%)		(995)		2%
Managerial & General Expenses		(24,457)		(5.0%)		(26,343)		(5.5%)		1,886		(7%)
Other Net Revenues (Expenses)		4,869		1%		15,490		3.2%		(10,621)		(69%)
Profit on Regular Activities		8,185		1.7%		22,118		4.6%		(13,933)		(63%)
Financing Costs		(5,635)		(1.2%)		(8,072)		(1.7%)		2,437		(30%)
Financing Revenues		1,440		0.3%		3,963		0.8%		(2,523)		(64%)
Company’s Share in Net Pre-Tax Profits, incl. Subsidiaries		242		0.0%		45		0.0%		197		438%
Pre-Tax Profit on Revenues		4,232		0.9%		18,054		3.8%		(13,822)		(77%)
Tax on Revenues		(12,008)		(2.5%)		(1,771)		(0.4%)		(10,237)		578%
Profit (Loss) for Period		(7.8)		(1.6%)		16,283		3.4%		(24,059)

Financial Affairs, Integrated Report (in millions of dollars)
Assets						Liabilities
		31/12/2011		31/12/2010				31/12/2011		31/12/2010
Current assets		322		416		Current liabilities		715		732
Fixed assets		1,264		1,305		Non-current liabilities		709		741
						Equity		162		248
Total		1,586		1,721		Total		1,586		1,721

Operational Statistics

			2011			2010			Change
Thousands of Scheduled & Charter Passenger Segments (paying passengers)			4,199			4,184			0%
Millions of Revenue Passenger-Kilometers (scheduled)			17,245			17,400			(1%)
Millions of Available Seat-Kilometers (scheduled)			21,479			21,336			1%
Load Factors (scheduled) in %			80.3%			81.6%			(2%)
Overall market share (scheduled & charter) in %			33.9%			37.1%			(9%)
Thousands of Flown Cargo-Tons			102.2			102.5			(0%)
Millions of Revenue Cargo Ton-Kilometers (RTK)			546.5			542.3			1%
Thousands of weighted flying hours (incl. leased equipment)			165.0			165.5			(0%)
Employees – Average personnel years (only the Company)
Permanent staff			3,855			3,820			1%
Temporary staff			2,201			2,091			5%
Totals			6,056			5,911			2%
Number of aircraft being operated at period end - units			37			39			(2)
Average age of owned aircraft fleet at period end (in years)			12.8			13.2			(0.4)