El Al Isreal Airlines (ELAL) Q2 2023 earnings summary

Executive summary

• Q2 2023 pre-tax profit was $58.8M, the highest second-quarter result since privatization; EBITDAR reached $163M vs. $65M YoY and $99M in Q2 2019.

• Results benefited from high demand, pricing and efficiency despite activity at 87% of Q2 2019 capacity, constrained mainly by aircraft and crew readiness.

Financial highlights

• Q2 operating revenue was $629.8M, up 22.0% YoY and 7.9% vs. Q2 2019; operating profit was $89.6M vs. $9.4M and $20.4M, respectively.

• Q2 net profit was $58.9M vs. $100.5M YoY; 2022 included a one-time $112M tax asset benefit. Excluding that benefit, profitability improved.

• H1 revenue was $1.130B, up 11.6% vs. H1 2019; operating profit was $97.7M vs. a $32.7M loss, and net profit was $24.5M vs. a $55.0M loss.

• H1 pre-tax profit was $33.0M vs. a $70.7M loss in H1 2019; net financing expenses rose to $64.6M from $38.7M.

Outlook and guidance

• 2023–2028 targets: fleet of 46 aircraft and revenue of $2.4B in 2023; 53 aircraft and $3.0B revenue in 2026; 59 aircraft and $3.5B revenue in 2028.

• By 2028, targets include EBITDAR of 17%–21% of annual revenue, debt/EBITDA of 3–4, and year-end cash equal to 10%–15% of revenue.

• Targets assume ~2% annual GDP growth and fuel prices based on the July 15, 2023 curve; results remain sensitive to fuel, geopolitical and security conditions, competition, regulation and funding availability.

• Delhi launch and Mumbai service resumption were planned for Q4 2023; code-share agreements with All Nippon Airways and Scandinavian Airlines were expected to begin in H1 2024, subject to implementation.