After obtaining a virtual monopoly on many roads to and from Israel, raising prices and achieving record profits, El Al Israel Airlines Ltd (level:Al) embarks on a spending spree to buy new planes for $2-2.5 billion. Earlier this year, El Al signed a deal to purchase three Boeing Dreamliner aircraft.
El Al, which is controlled by businessman Kenny Rosenberg and managed by CEO Dina Ben Tal Janancia, said last night that it is moving forward with a purchase and lease deal to purchase 30 Boeing 737 MAX aircraft. This will be the largest aircraft purchase deal ever in the history of Israel. Al Al newspaper reported that the Board of Directors agreed to hold exclusive talks with aircraft manufacturer Boeing and with aircraft leasing companies in order to complete the deal.
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The new aircraft will gradually replace El Al's current fleet of Boeing 737 aircraft and will expand the carrier's fleet of narrow-body passenger aircraft. The planes will be delivered over several years, starting in 2027. El Al said that the timeline for completing negotiations and signing the initial offer document with Boeing to purchase the planes is expected to take several more weeks, at which time the company will also begin talks with aircraft leasing companies.
Al Al stressed that it is not currently certain that a binding agreement will be signed or transactions will be completed with Boeing or with aircraft leasing companies. In order to cover the cost of financing the deal, the company raised capital earlier this year.
El Al shares rose after foreign airlines stopped their flights to Israel
El Al's financial results for the first quarter of 2024, published two weeks ago, showed how the war has benefited the Israeli airline's business performance. This is mainly due to the fact that most foreign airlines have suspended their flights to Israel. The first quarter is usually considered the weakest for airlines (the winter season), but the results were the best ever in El Al’s history with revenues reaching $738 million, up 47% from the first quarter of 2023, and better than last summer’s revenues.
With its virtual dominance over Israel's skies, and its control over 62% of passenger traffic at Ben Gurion Airport, El Al announced net profits of $80.5 million in the first quarter of 2024, compared to a net loss of $34.4 million in the corresponding quarter of 2024. The year 2024. 2023, and a net profit of $40 million in the fourth quarter of 2023. The huge profit erased nearly half of the deficit in “Al Al” shares, which now stands at $91 million.
The market value of El Al currently stands at 1.77 billion shekels, and the company's share price has increased by 25% since the beginning of the year.
Published by Globes, Israel Business News – en.globes.co.il – on June 11, 2024.
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