The Company recorded, in the First Quarter of 2016, a loss before tax of approx. USD 33 million, compared to a loss of approx. USD 22 million in the First Quarter of the previous year.
Net loss in the First Quarter of 2016 amounted to approx. USD 21.4 million, compared to approx. USD 16 million in the First Quarter of 2015.
Cash flows from operating activities for the First Quarter of 2016 amounted to approx. USD 72 million, compared to approx. USD 59 million in the First Quarter of the previous year.
EBITDA for the First Quarter totaled approx. USD 10.8 million, compared to approx. USD 25.8 million in the First Quarter of the previous year.
The Company's cash balances as of March 31, 2016 amounted to approx. USD 211 million.
The Company's fuel expenses decreased by approx. USD 35 million (after hedging expenses) due to a 37% decrease in the fuel price
El Al's CEO, David Maimon:
"The results for the First Quarter of 2016 were affected not only by the winter season, which is considered a relatively weak season, and from the fact that the Passover impact will be reflected in the Second Quarter, but also as a result of the increase in the Company's expenses due to disruptions in flights' staffing. We constantly continue the negotiations with the Pilot Representation in order to enable the Company to direct its efforts to cope with the increasing competition in the aviation industry. At the same time, we continue to prepare to receive the new Dreamliner aircrafts and to implement El Al's strategy by strengthening the Frequent Flyer Club, the UP flights, etc."
Dganit Palti, El Al's CFO, stated:
"The Company completes the First Quarter with cash balances of approx. USD 211 million, and with positive cash flows from operating activities of approx. USD 71.6 million, which serves as a solid basis for continuing to promote its investments within the framework of the Company's long-term acquisition program.
"During this quarter, three new narrow-body 737-900 aircrafts were delivered to the Company, which were financed by long-term loans from Israeli banks, thus attesting to the trust placed by the local banking system in the Company's strength and its long-term plans."
Profit and Loss Results for the Three Month Period Ended on March 31, 2016:
1. Operating Revenues– amounted to approx. USD 396.5 million, reflecting a decrease of approx. 5.6% compared to the First Quarter of the previous year, with a decrease of approx. 4.4% in passenger flights. The main reasons for the decrease in revenues are provided below:
- The reported quarter was affected by the timing of Passover, which this year occurred in the Second Quarter, whereas last year Passover occurred at the beginning of April, thus departures for Passover holiday have already started in the last week of March. Additionally, the reported quarter was further affected by the continued trend of decrease in fight ticket prices as a result of the impact of the drop in oil prices and the increased competition
- Revenues for the reported quarter were affected by the continued erosion of the exchange rate of various currencies, in which some of the Company's sales transactions are carried out (mainly Euro), in relation to the dollar.
On the other hand, revenues were positively affected by the growth in the number of the Company's passengers and its Revenue Passenger Kilometer (RPK).
In the Cargo Segment, the Company's revenues decreased by approx. 9.5%, mainly as a result of a drop in the yield of Ton-Kilometer and due to a decline in the amount of Ton-Kilometer flown and an adverse effect of exchange rates erosion.
2. Operating Expenses – operating expenses amounted to approx. USD 362.1 million, reflecting a decrease of approx. 1.4% compared to the First Quarter of the previous year. The decrease in operating expenses was mainly due to a decrease of approx. USD 35 million in jet fuel expenses. On the other hand, there was an increase in the amount of $ 30 million in other operating expenses (non-fuel expenses) of the Company, mainly due to an increase in the Company's activity, disruptions in flights' staffing and the need to find alternative solutions in this regard, and as a result of the wage increase due to the labor agreement signed in June 2015.
3. Jet Fuel Expenses – the Company's jet fuel expenses declined by approx. 30% compared to the corresponding expenditure in the previous year (including hedging impact), in a total amount of approx. USD 35.4 million as a result of a drop in jet fuel prices, which was partially offset by an increase in the amount of jet fuel consumed due to the growth in the scope of the Company's operations.
4. Selling Expenses – amounted to approx. USD 41.8 million, indicating a decrease of approx. 5% compared to the First Quarter of the previous year, mainly as a result of a decline in distribution expenses, both due to the decline in revenues and the decrease in commissions rates.
5. General and Administrative Expenses – amounted to approx. USD 22.1 million, reflecting a decrease of approx. 2% compared to the First Quarter of 2015, mainly due to the increase in the Company's payroll expenses.
6. Financing Expenses, net – amounted to approx. USD 4.7 million, compared to approx. USD 7.9 million in the First Quarter of last year. The decrease mainly resulted from the early repayment of a loan and a decrease in exchange rate differentials compared to the First Quarter of 2015.
7. Loss for the Period – loss before taxes amounted in the reported quarter to approx. USD 33.5 million and loss after taxes amounted to approx. 21.4 million, compared to loss before taxes of approx. USD 21.7 million and loss after taxes of approx. USD 16.0 million in the First Quarter of the previous year. The Company's tax benefit was positively affected by a tax benefit recognized in the current quarter due to the reduction in corporate tax rate to 25% (compared to 26.5%), which led to a decrease in the Company's net loss.
Balance Sheet Data as of March 31, 2016:
1. The Current Assets of the Company amounted to approx. USD 461.2 million, reflecting an increase of approx. USD 66.9 million compared to December 31, 2015. This increase mostly resulted from an increase in cash balances and a seasonal increase in the Trade receivables.
2. The Current Liabilities of the Company amounted to approx. USD 887.5 million. This increase of approx. USD 44.4 million compared to December 31, 2015 mainly resulted from a seasonal increase in Unearned revenues from flight tickets, an increase in other payables, mostly related to declared dividends, which were offset by a decrease in short-term borrowings and in the Derivative Financial Instruments.
3. Working Capital – the Group has a working capital deficit of approx. USD 426.3 million compared to a deficit of approx. USD 448.8 dollar as of December 31, 2015. It shall be noted, that a substantial part of the working capital deficit does not reflect short-term cash flows. Said working capital deficit consists of three substantial components, which are included in the Company's Current Liabilities items and are characterized by current business cycle; however, the Company is not required to use cash-flow sources in the short term in order to repay them: Unearned revenues from flight tickets, Unearned revenues related to Frequent Flyer Club, to be settled by providing future flight services, and liabilities to employees for vacation, which are expected to be paid over several years, but classified as a short-term liability in accordance with accounting principles. Such items are affected, inter alia, by the seasonality of the activity and the timing of the holidays.
4. Non-Current Assets – amounted to approx. USD 1,305.4 million, indicating an increase of approx. USD 35.6 million compared to their balances as of December 31, 2015. Said increase mainly resulted from an increase in the composition of the Company's assets as a result of receiving the three 737-900ER aircrafts, and on the other hand, from a decrease in depreciation expenses.
5. Non-Current Liabilities - totaled approx. USD 706.5 million, reflecting an increase of approx. USD 80.2 million compared to their balances as of December 31, 2015. Said increase resulted mostly from loans obtained to finance the acquisition of three 737-900 aircrafts, which was offset by a reduction in deferred tax liability as a result of the loss before tax for the period and the decrease in the corporate tax rate.
6. The Equity of the Company – amounted to approx. USD 172.6 million. The decrease of approx. USD 22.2 million compared to equity as of December 31, 2015, mainly resulted from the loss for the period, which amounted to approx. USD 21.4 million, and from the dividends declared in March 2016 of approx. USD 15.0 million, which were offset by the impact of the Company's hedging instruments on the capital reserves, in a net-of-tax amount of approx. USD 15.8 million.
About El Al
El Al Israel Airlines Ltd. (TASE: ELAL) is the National Air Carrier of Israel. In 2015, El Al recorded revenues amounting to nearly USD 2.1 billion. El Al carries about 5 million passengers a year. The Company operates flights to about 34 direct destinations around the world and many other destinations by means of cooperation agreements with other airlines, thus it currently operates 43 aircrafts, 28 of which are owned by the Company.
Details of Conference Call
A conference call shall took place on Wednesday, May 26, 2016, at 15:30. A recording of the conference call will be available to those interested starting from May 26, 2016, at 17:00, until June 2, 2016, via phone number 972-3-9255927, as well as on the Company's Investor Relations website at: www.elal.com/investor-relations starting from May 31, 2016.
For further details:
Head of Group Business Control and Investor Relations
El Al Israel Airlines Ltd.
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SOURCE EL AL Israel Airlines LTD