El Al Airlines: Q1 loss widens to $42.9 million

El Al noted a sharp rise in fuel costs which outpaced a negligible revenue gain. Revenue edged up 0.5% to US$425.2 million. Revenue from its cargo business jumped by 32%
 
El Al Israel's flag carrier reported last week a first-quarter net loss of US$42.9 million, compared with a loss of US$16.5 million a year ago.
 
The company noted a sharp rise in expenses which outpaced a negligible revenue gain. Revenue edged up 0.5% to US$425.2 million. Revenue from its cargo business jumped by 32%.The company said higher oil prices increased jet fuel expenses to US$147 million from US$129 million.
 
Chief Executive Elyezer Shkedy saidin a statement that "Profitability was hurt by the erosion in the dollar's exchange rate, the timing of the Passover holiday which occurred in the second quarter and not the first, and a substantial increase in competition".
 
First-quarter operating expenses rose 11% to US$403.4 million while revenue increased just 0.5% to US$425.2 million, producing a gross profit of US$21.8 million, down 63% from US$59.6 million in the year-ago period.
 
Shkedy also noted that "On the revenue side there was a significant increase in competition, reflected in the 14% increase in capacity offered by foreign carriers at Ben Gurion International Airport".
 
Its load factor -- a measure of seats sold -- fell to 76.7% from 81.2% a year earlier and its market share at Ben-Gurion International Airport was down to 38.2%.
 
The carrier conceded that its market share was down about 5% year-over-year to 38.2% in the first quarter. The airline's average load factor in the March quarter was 76.7%, down 4.5 points year-over-year.
 
Shkedy noted that the company " implementing a plan to lower costs, including reducing the fleet of fuel-inefficient planes and strengthening our technological innovation."
 
Shkedy added "We are still developing additional new growth engines in various fields, including strategic cooperative agreements. During the quarter El Al augmented cooperation agreements with other international airlines, so as to expand the number of connection-destinations we offer. In this regard we expanded the code share agreement which was signed with Siberia Airlines in 2010, adding nine additional destinations throughout Russia”.