El Al Airlines concludes the first quarter of 2022 with a loss of $ 66 million despite an increase in revenue, a sixth consecutive quarter. This is the latest report signed by Avigal Sorek, who will end his position as CEO today. He will be replaced by Dina Ben-Tal Genensia, who will have to deal with workers’ sanctions that have led to flight cancellations in the past month. Just yesterday, three EL AL flights were canceled due to difficulty in staffing.
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El Al’s revenues in the first quarter totaled $ 282 million, compared to $ 116 million in the corresponding quarter in 2021. The loss was reduced to $ 66 million, compared to $ 86 million in the corresponding quarter. The company recorded an improvement in the company’s cash flow operating profit (EBITDA) and it stood at $ 15 million compared to $ 11 million in the previous quarter and only $ 2 million in the corresponding quarter in 2021. The company explains that the increase in revenues due to an increase in the company’s activity was offset by the increase in jet fuel prices.
The company did not fully recover from the corona crisis: the volume of activity in the first quarter of 2022 was 53% compared to the corresponding quarter in 2019 before the corona crisis. According to the company’s data, so far this year, the number of Israelis going abroad is 66% of the same period in 2019, and the number of tourists entering is only 32%. At the same time, jet fuel prices rose by 82% during the first quarter, among others. Following the war in Ukraine.
Rent a building from the controlling owner
El Al notes in the report that “against the backdrop of streamlining and cost-saving measures,” the board approved last month to move the company’s U.S. headquarters from New York to Miami. The company explained that the move is due to the high rental costs in Manhattan. Later in the report, under the section “Stakeholders and related parties”, EL AL’s agreement with “Tavrenkel Restaurant” appears, as well as the company’s agreement in a lease agreement for an office building, in which the controlling owner of the company, Kenny Rosenberg, has a personal interest. By the Audit and Remuneration Committee and the Board of Directors as “negligible transactions”.
The company claims that the decision to rent the offices from a company owned by Rosenberg was made after a procedure that examined various alternatives, and finally it was decided that this is the best alternative. The annual rent he asked to pay to a company owned by Rosenberg is about $ 90,000, and according to the company, the deal was also approved by the Ministry of Finance.
Regarding the restaurant, they explain that this is a one-time transaction in the amount of $ 20,000 that was made due to a demand for catering with mehadrin kosher for the event.
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Outgoing El Al CEO Avigal Soreq and incoming CEO Dina Ben Tal Genensia
(Photos: Ofer Hajibi, El Al)
“Profitability is a realistic goal”
Outgoing El Al CEO Avigal Soreq said at the presentation of the report: “The first quarter is a very special quarter, we had the omicron and the sky was closed and only towards March were the restrictions removed. In January we were about 50% of what we were in 2019 and in March we were 83 % Compared to 2019, the company’s focus is to return to production capacity as soon as possible. “
The company’s CFO Yitzhak Eliav said the company intends to move to profitability in the second half of 2023. Asked if this is a realistic goal, Sorek and Eliav said there are many parameters beyond the company’s control such as labor relations, fuel prices and competition. “Profitability is a very realistic goal But the whole village has to work to get it, “said the outgoing CEO.
Incoming CEO Ben Tal Genensia commented on the company’s future strategy and said that the focus should be on excellence in service. “We will make every effort to improve customer service, including by external suppliers,” she said. Other include turning Ben Gurion Airport into a ‘parent’ for flying cargo and passengers, creating partnerships in North America, a significant entry into the world of tourism and accelerating the digital transformation of the company’s services. She further said that there is an intention to test flights to new destinations like Australia.
Asked by Calcalist about dealing with the competition at Ben Gurion Airport, Shlomi said with Shalom, the company’s vice president and chief of staff: “El Al knows how to compete. We have the best planes and the best network of lanes and slots.” However, he added: “The competition is not fair. We are not flying over Saudi Arabia and we are not flying to Turkey.”