LOD, Israel, May 29, 2019 /PRNewswire/ --
- The Company's (TASE: ELAL) revenues for the quarter amounted to approximately USD 429 million compared to USD 460 million in the same quarter last year, indicating a decrease of about 7%, mainly due to the impact of the timing of Passover, which occurred this year in the second quarter
- Operating expenses for the reported quarter amounted to approximately USD 403 million compared to USD 426 million in the same quarter last year, reflecting a decrease of about 5%, mainly as a result of the decline in fuel expenses due to a decrease in fuel prices and consumption, among others, due to the efficient Dreamliner aircrafts. In addition, general and administrative
expenses decreased by 21%
- The Company initially applied the accounting standard IFRS 16 "Leases", which increased expenses by approximately USD 5 million.
- The Company recorded a loss for the period of approximately USD 55 million, compared to a loss of approximately USD 44 million in the same quarter last year
- The Company's cash and deposits balances as of March 31, 2019 amounted to approximately USD 240 million.
- For the first time in Israel: The company announces the launch of a new direct route between Tel Aviv and Tokyo, Japan
EL AL's CEO, Gonen Usishkin, announced today as follows:
"The timing of Passover, which occurred this year during the second quarter, caused the demand to be diverted to the second quarter of 2019. Revenues were also affected by the competition, mainly on the routes to the Far East and Europe, in particular vis-à-vis Low-Cost airlines. Furthermore, during interim period, while fleets are being replaced, the Company's operating efficiency is impaired. In this quarter, we have adjusted the volume of activity to changes in the fleets of the Company, in particular the closure of the 767-300ER fleet, and to the new pilot regulations (FTL). Accordingly, the Company reported during the first quarter of 2019, a decrease of approximately $ 32 million in revenues. Alongside this, the Company reported a decrease of approximately USD 23 million in operating expenses, half of which is attributable to the decline in fuel expenses. Additionally, the Company recorded a decline of approximately USD 8 million in general and administrative expenses.
"The Company is in the midst of implementing a multiyear plan to improve both the product and customer experience, inter alia, by removing old aircrafts from service and executing the acquisition of 16 new 787-9 Dreamliners in accordance with El Al's Acquisition Program. The Program progresses as scheduled. So far, the Company received 9 new Dreamliners, two of which were received since the beginning of the year. Our customers show high satisfaction from these airplanes. Furthermore, the Company has established a program to improve the interiors of aircraft of existing fleets, which also progresses as scheduled.
"We make effort to expand the route network by launching routes to new destinations. In March 2019, the Company launched the route to Niece, and in May 2019, the routes to San Francisco and Manchester were launched. In the coming June, the Company will launch the route to Las Vegas and in March 2020 it will launch the route to Chicago. I am pleased to inform our customers that the Company announced today the launch of a direct scheduled route to Tokyo, which will operate in Israel for the first time starting March 2020. The route network expansion increases the Company's supply of products to its customers and the volume of its operations, and strengthens its position as the Israeli market leader."
Dganit Palti, EL AL's CFO, announced today as follows:
"In this quarter, the Company initially applied the accounting standard IFRS 16, which has material impacts on the Company's balance sheet, with assets increasing by approximately USD 704 million and liabilities increasing by approximately USD 722 million. Moreover, the implementation of IFRS 16 caused an increase of approximately USD 5 million in the expenses for the reported quarter. The Company's fuel expenses for the reported quarter decreased by about 11% due to a decline in jet fuel prices and mainly due to a decrease in the amount of jet fuel consumed, inter alia, due to the operation of the new 787-9 Dreamliners, which are efficient in fuel consumption.
"The Company's cash and deposits balances as of March 31, 2019 amounted to USD 240 million, thus allowing the continued implementation of the Acquisition Program."
Following are the main impacts on the Company's results for the reported quarter:
Revenues for the quarter amounted to approximately USD 4228.6 million compared to USD 460.4 million for the first quarter of 2018, indicating a decrease of approximately USD 31.8 million, which was mainly attributable to the following factors:
- A decrease of approximately USD 21 million in passenger revenue due to a decrease of 4.8% in revenue-ton-kilometer (RTK) flown by the Company, which is attributable to the timing of Passover, which fell this year in the second quarter, and the impact of the competition, mainly on the routes to the Far East and the routes to Europe vis-à-vis low-cost airlines.
- The average revenue per RPK (passenger yield) decreased by about 2.6% as a result of the competition.
- A negative impact of exchange rates of currencies in which some of the Company's sale transactions are performed, in relation to the dollar.
- A decrease of approximately USD 8 million in cargo revenues.
Operating expenses for the quarter amounted to approximately USD 403 million compared to a decrease of approximately USD 426 million for the first quarter of 2018 indicating a decrease of approximately USD 23 million which is mainly attributable to the following factors:
- A decline in fuel expenses of approximately USD 12 million compared to the first quarter of 2018, as a result of the decrease in the amount of fuel consumed, inter alia, due to the entry of the 787-9 Dreamliners, which are efficient in fuel consumption, and the drop in jet fuel prices.
- A decrease in expenses of approximately USD 6 million resulting from the implementation of IFRS 16, which diverted some of the Company's lease expenses to the financing item.
- A decrease in other operating expenses as a result of the positive impact of exchange rates and the reduction in flight hours.
- An increase arising from a one-time expense of USD 4 million for the early removal of the 767-300ER fleet from service, in relation to the original plan.
- An increase in payroll expenses primarily resulting from new labor agreements, which was offset by the impact of the shekel weakening against the dollar compared to the first quarter of 2018. On the other hand, it should be noted that as a result of signing the agreement with the pilots, a decrease occurred in other operating expenses, such as wet-lease expenses.
General and administrative expenses for the quarter amounted to USD 30 million, compared to USD 38 million for the first quarter of 2018, indicating a decrease of approximately USD 8 million, which is mainly attributable to the following factors:
- A decrease in expenses for legal claims, a decrease in payroll expenses mainly due to the impact of exchange rate differences, and a decrease in other expenses, such as consulting services and professional services.
Financing expenses for the quarter amounted to approximately USD 18 million compared to USD 4 million for the first quarter of 2018, reflecting an increase of USD 14 million, which is mainly attributable to the following factors:
- IFRS 16 implementation, as explained above, which resulted in an increase in interest and exchange rate differences expenses of USD 10.5 million.
- An increase in interest expenses on loans as a result of an increase in the amount of loans taken by the Company to finance the new 787-9 aircraft purchased by the Company and an increase in the average Libor rate.
The contents of this notice do not replace reading the Company's financial statements for 2018, the financial statements for the first quarter of 2019 and immediate reports published from time to time by the Company.
About El Al
El Al Israel Airlines Ltd. is the National Air Carrier of Israel. In 2018, El Al recorded revenues amounting to nearly USD 2.1 billion. El Al carries about 5.6 million passengers a year. The Company operates flights to about 39 direct destinations around the world and many other destinations by means of cooperation agreements with other airlines, thus it currently operates 43 aircrafts, of which 27 are owned by the Company.
Details of Conference Call
A conference call took place on Wednesday, May 29, 2019, at 12:30 IL. A recording of the conference call will be available to all interested parties from May 29, 2019, at 14:00 IL, until June 5, 2019, via phone number +972-3-9255943, as well as on the Company's Investor Relations website at: https://ir.elal.com.
For further details:
SOURCE EL AL Israel Airlines Ltd.