El al: net loss of $18.5 Million in Q1

El Al Chairman of the Board Professor Israel (Izzy) Borovich and El Al President Haim Romano presented the airline's first quarter results for 2005. The net loss for the quarter amounted to approximately $18.5 million as compared with a net profit of $4.5 million in the parallel quarter.
 
In edition, revenues in this quarter grew by approximately 6% as compared with the parallel quarter of last year and totaled approximately $319 million. Fuel prices rose by approximately 40% as compared with the parallel quarter last year. Cash flow from current activities totaled approximately $21 million. Equity totaled about $190 million, up 4% since the beginning of the year
 
The results this quarter are a consequence of a 3% increase in the number of passengers El Al flew, an increase in income per passenger/kilometer and an increase in revenue per ton flown.
 
Operational expenses showed an increase, due mainly to the 40% increase in jet fuel prices, a rise of approximately 26% in salary expenses due primarily to changes in the currency exchange rate as well as the effect of the cancellation of the "Economic Growth Encouragement" law.
 
El Al Chairman of the Board Professor Israel (Izzy) Borovich noted upon presentation of the financials for the first quarter that El Al displays financial strength and the ability to deal with the challenges, as can be seen in the company's positive cash flow and equity. “We are ready for the unveiling of the airline's strategic plans, ‘El Al 2010’, which will introduce changes in the airline's product, service and operation and will turn the national carrier of Israel into a leading international carrier, capable of competing with the largest airlines in the world”.
 
El Al President Haim Romano: “Had fuel prices been identical to their average level last year, the results in the quarter under review would have indicated a net profit and not a loss”.
 
Haim Romano noted that in the first quarter the airline recorded peak revenues reflecting a growth of 6% over the parallel period last year. "In addition to the seasonality that is built into the aviation industry, we were compelled to deal with the continued fuel price hikes – and fuel is the airline's main raw material – and with the effects of the tsunami in the Far East”.
 
Romano added: “The average price of fuel in the quarter under review was about 40% higher than the average price in the parallel period last year. As a result, the proportion of the expenditure for fuel rose from 20% from the first quarter of 2004 to 24% in the present quarter. Thanks to hedging acvities, the company succeeded in saving some $9 million in fuel costs during the quarter. The effect of the rise in price of jet fuel plays so significant a part in the company's results that had the cost of fuel been identical to that of last year, the results in the quarter under review would have been a net profit instead of a loss".
 
Romano further pointed out that "the effect of the tsunami led to a temporary decline in demand for flights to the Far East. As El Al is a scheduled airline, with a strategic commitment to its passengers to maintain a stable flight timetable, we continued to fly as planned to the Far East, taking into account the temporary impact on the company's operational cost effectiveness indices. And indeed, load factor dropped from 74% in the first quarter of 2004 to 72% in the current quarter”.