El Al, Israel’s national airline, has posted its first annual profit in nearly a decade. Rafi Harlev, president of the airline, said that “As a result of managing operations carefully, El Al Israel Airlines has substantially reduced its debt burden and is showing a net profit of $15.2 million on revenues of approximately $567 million for the fiscal year that ended March 31, 1987, For the same period last year, El Al reported a loss of $6.7 million on revenues of $491 million.”
The announcement of El Al’s financial turnaround led to speculation on Wall Street that the Israel government-owned airline will soon go public and sell its stock on the New York Stock Exchange. The speculation was fired by the fact that a number of other government-owned airlines, such as British Airways and Japan Airlines, have recently gone public or announced plans to do so. In addition, the speculation was also prompted by the practice of airlines trying to improve their profitability and announcing management operations improvements before a public sale.
“We can reasonably project that in the next two or three years it would make a lot of sense for the Israeli government, if El Al continues to show a profit, to sell its stocks.” said Aviva Lavi, director of public relations and advertising for El Al. “But it is the government’s final decision.”
David Schein, general manager and vice president of El Al in North and Central America, said it is the policy of the Israeli government to sell its companies, and since El Al is now showing a profit there are many financial organizations that have expressed interest in purchasing the company. El Al is among 600 government-owned companies that could be sold, Schein said.
FACTORS IN IMPROVEMENT
The airline, in a statement by Harlev released in Tel Aviv, cited many factors that have contributed to its improvement. According to Harlev, El Al managed operations very carefully during the past year, resulting in a whole line of scheduling improvements, which include expanded non-stop service, aggressive cost-cutting measures and the streamlining of operations, Harlev said.
The airline also reported a 77 percent North Atlantic route load factor (percentage of the plane filled) compared to the International Airline Transport Association’s industry average of 63 percent. Improvements also included an 84 percent on-time performance record for the year, which, Lavi said, is higher than most, although she could not compare it to an industry average since until now airlines have not been required to register their percentages.
Over the year, El Al’s permanent staff was reduced from 3,568 to 3,538. “The employes at El Al are really committed.” Lavi noted. “They had to cope with less personnel, and it was difficult, but they really care. El Al is a Jewish airline and they are proud of it.”
Another accomplishment was that in the past year El Al carried over 1.5 million passengers. The company has started offering package tour deals to expand its market penetration. These include the “Milk and Honey” tours to Israel; special programs to Poland, Czechoslovakia, Hungary and Israel; and extensions to London. Cairo and Eilat, El Al recently inaugurated services to Israel from Madrid, Toronto and Boston.
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