Today El Al Presents Its Financial Statements for the Second Quarter of 2014
18-Aug-2014 Mr. Maimon, El Al's CEO: "The results of the second quarter of 2014 are a reflection of the continued adaption of operations to the business environment. In 2014 Passover holiday was in the second quarter. El Al continued to significantly increase its operations, the supply of seats being increased by 13% compared to the equivalent quarter in the previous year, with only a slight increase in operating expenses of about 4%.
"The Company's commercial operations and operating efficiency resulted in a load factor of 84.4%, an increase of 2% compared to the equivalent period in the previous year.
"The Company, during the quarter, had to deal with considerable competition, which is expressed in a significant increase of 23% in traffic at Ben Gurion Airport, where El Al's market share was 31.9%.
"In the second quarter, as a response to trends in global markets and to changing needs in the international aviation environment, a new aviation brand was started to operate for Low cost flights - UP with destinations to Berlin, Budapest, Larnaca, Kiev and Prague.
"The sale of tickets through the internet increased during the quarter by about 20% and direct sales by the Call Center recorded an increase of about 8%.
"The Frequent Flyer Club's operations in Israel and internationally continues to show a significant increase ,and the Club today has 1.35 million members. We are taking steps to change the Club's operating model. During the third quarter a branded credit card will be launched in cooperation with financial institutions.
"During the current period the Company has to deal with the effect of the Operation Protective Edge which occurred in the third quarter. The Company estimates that due to the cancellation of flights and a decline in orders as a result of Operation Protective Edge, revenues in the third quarter of 2014 are expected to be reduced by about 55 - 65 million dollars, which will have a considerable detriment affect on business in the third quarter.
"As a result of the negative effect of the Operation Protective Edge on the local aviation industry, the Company, together with other Israeli airlines approached the relevant government ministeries requesting to receive compensation from the State. It should be mentioned that the Company continued its flights during the Operation despite the decline in demand, and even agreed to the State's request to assist in flying passengers of foreign airlines who ceased their operations to Ben Gurion Airport.
"During Operation Protective Edge hundreds of company employees were recruited for reserve duty. I would like to particularly thank all Company employees - those that were recruited to the military operation and those who, during this period, did their utmost to provide our customers with the best possible service and to operate El Al flights during all the days of the operation and also to operate many additional flights in order to bring back many passengers to Israel."
Dganit Palti, El Al's CFO: "The results of the quarter reflect a significant increase in the Company's operations, partly as a result of the timing of the Passover holidays which occurred in the second quarter, whereas in the previous year it fell during the first quarter. The Company presents profits of about 16.3 million dollars compared to 3.7 million dollars during the equivalent quarter in the previous year. Cash flows from operating activities amounted to 84.2 million dollars during the quarter, which is the highest over the past five years.
"During the first half of 2014 we invested 66 million dollars in acquiring aircraft and equipment as part of the transaction for the acquisition of 8 737-900 aircraft's, which we signed in the past, and concurrently we repaid net financial liabilities of about 20 million dollars.
"The Company ended the quarter with a balance of cash and deposits of 187.9 million dollars on June 30, 2014 which strengthens its financial stability."
EL AL ISRAEL AIRLINES LTD. TODAY PUBLISHED ITS FINANCIAL RESULTS TO SUMMARIZE THE FIRST HALF OF 2014 AND THE SECOND QUARTER OF THE YEAR. THE FOLLOWING ARE THE MAIN RESULTS:
Results for the second quarter of 2014:
- Revenues in the present quarter amounted to 571.5 million dollars compared to 529.7 million during the equivalent quarter in the previous year, an increase of about 8%. Revenues from passengers recorded an increase of about 9% as a result of an increase in the number of passengers flown, after setting off a decrease in passenger kilometer revenues. Revenues from transporting cargo declined by about 3.6% mainly as a result of decline in ton-kilometers flown. In other revenues there was an increase of about 12.3% compared to the equivalent quarter in the previous year, mainly as a result in the sales of aircraft food to outside factors.
- Operating expenses in the second quarter showed an increase of about 4% to 466.3 million dollars, compared to 447.8 million dollars in the equivalent quarter in the previous year, and this mainly as a result in the increase in the volume of operations. The rate to turnover declined from about 84.5% in the second quarter of 2013 to about 81.6% in the reported quarter.
- Salary expenses increased in the reported period compared to the equivalent period in the previous year, mainly due to the effect of the revaluation in the average rate of exchange of the shekel against the dollar, on expenses in shekels.
- Fuel expenses increased by about 0.6% compared to the equivalent quarter in the previous year. The increase stemmed mainly from the effect of the increase in operations which were set off by the effect of the decline in the effective price of jet fuel which includes the results of hedging operations that the Company undertook. It should be mentioned that the price of diesel fuel in the market increased in the reported period compared to the equivalent period in the previous year, but the Company's hedging transactions resulted in a reduction in the effective price for the Company. The rate of diesel fuel expenses to turnover declined from about 33.8% in the equivalent quarter in the previous year to about 31.9% in the present quarter. Total returns from hedging in the reported period amounted 1.7 million dollars compared to 3.8 million dollars payments for hedging transactions in the equivalent quarter in the previous year.
- The number of employees, permanent and temporary in the Company, at the end of the second quarter stood at 6,147 employees, compared to 5,956 employees during the equivalent quarter in the previous year.
- Gross profit in the present quarter amounted 105.3 million dollars (a rate of about 18.4% of turnover) compared to 82 million dollars in the equivalent quarter in the previous year (a rate of about 15.5% to turnover).
- Operating profit amounted 24.6 million dollars compared to operating profit of 7 million dollars in the equivalent quarter in the previous year.
- Financing expenses in the reported quarter - the Company recorded net financing expenses (less financing income) of 2.2 million dollars, compared to net financing expenses of 2.1 million dollars during the equivalent quarter in the previous year. The change stems mainly as a result of a decline in revenues from hedging the rate of exchange, which was set off by a decrease in rate of exchange differences, and income from the revaluation of the Maman's options in the reported quarter of 1.3 million dollars.
- Net profit in the second quarter of 2014 amounted to 16.3 million dollars compared to income of 3.7 million dollars during the second quarter of 2013.
- Cash flows from operating activities in the second quarter of 2014 amounted to 84.2 million dollars compared to 47.8 million dollars in the equivalent quarter in the previous year.
- The Company's EBITDA in the second quarter of 2014 amounted to 52.3 million dollars, compared to 31.9 million dollars for the equivalent quarter in the previous year.
Results of the first half of 2014:
- Revenues in the first half of the present year amounted to 986.9 million dollars compared to 960.7 million dollars in the first half of the previous year, an increase of about 3%.
- Operating expenses in the first half of 2014 amounted to 864.7 million dollars compared to 840.9 million dollars during the equivalent period in the previous year, an increase of about 3%. The change stems mainly from an increase in operations.
- Salary expenses from operations increased during the first half of 2014 compared to the equivalent period in the previous year mainly due to the effect of the revaluation of the average rate of the shekel against the dollar on expenses in shekels.
- Fuel expenses decreased at a rate of 1.5% compared to the equivalent period in the previous year, this due to the changes in the fair value of hedging transactions which are not recognized as hedging, an increase in hedging receipts and a decrease in the prices of jet fuel which was set off by an increase in the Company's operations. The rate to turnover declined from 34.6% to 33.2%, and income from hedging in the quarter of report amounted to 1.9 million dollars compared to 0.3 million dollars of hedging income during the equivalent period in the previous year.
- Gross profit in the first half amounted to 122.2 million dollars compared to 119.8 million dollars during the equivalent period in the previous year.
- Loss from operations in the first half of 2014 amounted to 27.3 million dollars compared to a loss from operations of 29.3 million dollars in the first half of 2013.
- Financing expenses in the first half of 2014 the Company recorded net financing expenses (less financing income) of 5.5 million dollars compared to net financing expenses of 9.1 million dollars during the equivalent period in the previous year. The decline resulted from a decline in expenses for rate of exchange differences and an increase in revenues from revaluing Maman options which were set off by a decrease in income from rate of exchange hedging.
- Net loss in the first half of 2014 amounted to 23.4 million dollars compared to a loss of 28.8 million dollars during the same period in 2013.
- The Company's EBITDA in the first half of the year amounted to 27.5 million dollars compared to EBITDA of 20.7 million dollars during the equivalent period in the previous year.
Additional data:
- As of June 30, 2014, the balance of cash, cash equivalents and short-term deposits of the Company amounted to 187.9 million dollars. It should be mentioned that during the first half of 2014 the Company invested 66 million dollars in acquiring aircraft and equipment, according to the Company's multi-annual investment plan, the Company repaid current loans of 71.7 million dollars and received net loans of 51.9 million dollars, to finance the acquisition of new aircraft.
- The Company's shareholders' equity on June 30, 2014 amounted to 140.7 million dollars compared to 107.3 million dollars on June 30, 2013.
Details of a conference call
El Al's Management conference call can be heard in a repeat broadcast as from August 14, 2014 at 14:00 until August 21, 2014 at telephone 03-9255927.
About El Al
El Al Israel Airlines, is the Israeli national carrier. In 2013 El Al recorded revenues of 2.1 billion dollars and in the first half of 2014 it had revenues of 987 million dollars. El Al flew 2.2 million passengers. The Company flies to about 35 direct destinations in the world, and to many additional destinations through cooperation agreements with other airlines, and today operates 40 aircraft, of which 25 aircraft are owned by the Company. El Al is Israel's leading cargo carrier.
(www.elal.co.il/InvestorRelations) (www.elal.co.il)
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FINANCIAL AND OPERATING EMPHASES IN THE SECOND QUARTER OF 2014 |
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INCOME STATEMENT - (in thousands of dollars) |
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| April - June | April - June | Change | ||||||||||||||||
| 2014 | 2013 | |||||||||||||||||
|
in
|
% of
|
in
|
% of
|
Thousands
|
% | |||||||||||||
| Operating Revenues | 571,532 | 100 | % | 529,727 | 100 | % | 41,805 |
7.9 |
% | |||||||||
| Operating Expenses |
(466,282 |
) |
(81.6 |
%) |
(447,750 |
) |
(84.5 |
%) |
(18,532 |
) |
(4.1 |
%) | ||||||
| Gross Profit | 105,250 |
18.4 |
% | 81,977 |
15.5 |
% | 23,273 |
28.4 |
% | |||||||||
| Selling expenses |
(53,670 |
) |
(9.4 |
%) |
(50,329 |
) |
(9.5 |
%) |
(3,341 |
) |
(6.6 |
%) |
||||||
|
General and Administrative Expenses |
(27,011 |
) |
(4.7 |
) |
(26,780 |
) |
(5.1 |
%) |
(231 |
) |
(0.9 |
%) |
||||||
|
Other Income (Expenses) |
55 |
0.0 |
% | 2,085 |
0.4 |
% |
(2,030 |
) |
||||||||||
|
Profit from Operations |
24,624 |
4.3 |
% | 6,953 |
1.3 |
% |
17,671 |
|||||||||||
| Financing Expenses |
(6,185 |
) |
(8,440 |
) |
2,255 |
|
||||||||||||
| Financing Income | 3,946 | 6,368 |
(2,422 |
) |
||||||||||||||
|
Company's Share in Net Profits of Affiliated Companies |
168 | 163 | 5 | |||||||||||||||
| Profits before Taxes on Income | 22,553 | 5,044 | 17,509 | |||||||||||||||
| Taxes on income |
(6,259 |
) |
(1,337 |
) |
(4,922 |
) |
||||||||||||
| Profit for the period | 16,294 | 3,707 | 12,587 | |||||||||||||||
| January-June 2014 | January-June 2013 |
Change |
|
||||||||||||||
|
in
|
% of
|
in
|
% of
|
thousands
|
% | ||||||||||||
|
|
|||||||||||||||||
| Operating Revenues | 986,949 | 100 | % | 960,720 | 100 | % | 26,229 |
2.7 |
% | ||||||||
| Operating Expenses |
(864,730 |
) |
(87.6 |
%) |
(840,885 |
) |
(87.5 |
%) |
(23,845 |
) |
(2.8 |
%) |
|||||
| Gross Profit | 122,219 |
12.4 |
% | 119,835 |
12.5 |
% | 2,384 |
2.0 |
% | ||||||||
| Selling expenses |
(99,569 |
) |
(10.1 |
%) |
(96,586 |
) |
(10.1 |
%) |
(2,983 |
) |
(3.1 |
%) |
|||||
|
General and Administrative Expenses |
(54,904 |
) |
(5.6 |
%) |
(52,410 |
) |
(5.5 |
%) |
(2,494 |
) |
(4.8 |
%) |
|||||
|
Other Income (Expenses) |
4,948 |
0.5 |
% |
(177 |
) |
(0.0 |
%) |
5,125 | |||||||||
|
Loss from Operations |
(27,306 |
) |
(2.8 |
%) |
(29,338 |
) |
(3.1 |
%) |
2,032 | ||||||||
| Financing Expenses |
(11,436 |
) |
(17,906 |
) |
6,470 | ||||||||||||
| Financing Income | 5,955 | 8,781 |
(2,826 |
) |
|||||||||||||
|
Company's Share in Net Profit of Affiliated Companies |
447 | 261 | 186 | ||||||||||||||
|
Loss before Taxes on Income |
(32,340 |
) |
(38,202 |
) |
5,862 | ||||||||||||
| Tax Benefit | 8,980 | 9,449 |
(469 |
) |
|||||||||||||
|
Loss for the period |
(23,360 |
) |
(28,753 |
) |
5,393 | ||||||||||||
| Consolidated Statements of Financial Position | |||||||||||
|
Assets |
Liabilities |
||||||||||
|
30/6/2014 |
31/12/2013 |
30/6/2014 |
31/12/2013 |
||||||||
|
Current assets |
460 | 312 |
Current liabilities |
923 | 728 | ||||||
| Non-current assets | 1,256 | 1,255 | Non-current liabilities | 652 | 660 | ||||||
| Equity | 141 | 180 | |||||||||
| Total | 1,716 | 1,567 | Total | 1,716 | 1,567 | ||||||
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Operating Data |
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|
April-June
|
April-June
|
Change | ||||
| Passenger leg Scheduled and Chartered - (paying passengers) in thousands | 1,258 | 1,152 |
9.2% |
|||
|
Revenue Passenger-Kilometers (RPK) - (scheduled) - in millions |
5,199 |
4,706 |
10.5% |
|||
|
Available Seat-Kilometers (ASK) (scheduled) - in millions) |
6,164 | 5,709 |
8.0% |
|||
| Load Factors (scheduled) - in % |
84.4% |
82.4% |
2.4% |
|||
| Overall market share (scheduled & chartered) in % |
31.9% |
33.8% |
(5.6%) |
|||
| Thousands of Flown Cargo-Tons | 21.8 | 23.5 |
(7.2%) |
|||
| Millions of Kilometer Cargo Ton-Kilometers (RTK) | 114.6 |
121.6 |
(5.8%) |
|||
| Weighted flying hours (incl. leased equipment) - in thousands | 42.1 | 40.3 |
4.4% |
|||
|
January-June
|
January-June
|
Change | ||||
| Passenger leg Scheduled and Chartered - (paying passengers) in thousands | 2,112 |
2,033 |
3.8% |
|||
| Revenue Passenger-Kilometers (RPK) -(scheduled) - in millions | 9,022 |
8,454 |
6.7% |
|||
|
Available Seat-Kilometers (ASK) (scheduled) - in millions) |
10,898 |
10,296 |
5.8% |
|||
| Load Factors (scheduled) - in % |
82.8% |
82.1% |
0.8% |
|||
| Overall market share (scheduled & chartered) in % |
32.5% |
34.2% |
(4.8%) |
|||
| Thousands of Flown Cargo-Tons | 44.6 |
46.4 |
(4.1%) |
|||
| Millions of Kilometer Cargo Ton-Kilometers (RTK) | 234.8 |
239.2 |
(1.8%) |
|||
| Weighted flying hours (incl. leased equipment) - in thousands | 75.9 | 74.3 |
2.2% |
|||
| No. of aircraft in operation at end of period - in units | 39 | 37 | 2 | |||
| Average age of owned aircraft fleet at end of period I in years | 12.3 | 12.9 |
(0.6) |