EL AL has continued its profit trend, as revenues rose by 17% in 2005 when compared with 2004, totaling approximately $1.62 billion.Operational profits reached $89 million and net profits - the highest in the airline’s history - increased by 94% over the previous year to stand at $64.1 million. The profit growth marks an important year for Israel’s national carrier, as control of EL AL moved from the State of Israel to Knafaim Arkia Holdings at the beginning of 2005, leading to changes in company management and its organizational structure.
The increase in EL AL’s record revenue was achieved despite a steep upsurge in competition in the skies and the cost of fuel, which rose 44% throughout the year. Despite returns of $65 million as a result of hedging, the airline’s outlay for jet fuel in 2005 reached approximately $388 million. However, EL AL did succeed in reducing operating expenses, which totaled $1.2 billion.
EL AL also succeeded in absorbing a rise in passenger traffic and increasing the load factor on its planes from 76.9% to 79.4%. Worldwide, EL AL today competes for passenger traffic with about 40 scheduled airlines and about 55 charter companies. Foreign carriers are showing a growing interest in the Israel market and have been receiving more and more authorization from Israel’s Civil Aviation Authority to increase their flight capacity to and from Israel. EL AL has responded by increasing its efforts, creativity and individual investment to continue to grow and maintain its high level of profitability.
“The achievements of 2005 fill our hearts with pride and strengthen our confidence in our ability to succeed. It gives me great joy to see how diligently EL AL’s employees have dedicated themselves to reaching the objectives of this competitive commercial company,” stated Haim Romano, President, EL AL Israel Airlines. “A survey published in Israel’s newspaper Yediot Aharonot, showing EL AL to be the outstanding leader for on-time performance and operations as well as for professional and courteous service, attests to this dedication. These impressive achievements are also, without a doubt, a direct result of EL AL’s investment in our route expansion, increased frequency, aircraft upgrades and improved customer service.”
The year 2005 can be characterized as a year of renewal for EL AL. In January, EL AL became a private airline, no longer controlled by the government of Israel. By September of 2005, “EL AL 2010”, the carrier’s five-year plan was launched, and the company began intensive activity to realize its targets. EL AL is currently investing hundreds of millions of shekels in renewing its fleet and recently signed an agreement for the purchase of two Boeing 777 aircraft. The airline also leased two 737-800 planes and signed an agreement for an additional 767, and is moving forward on cooperative agreements with international airlines. In 2006, EL AL has already added frequencies to a long list of destinations, including Toronto, Los Angeles, Bangkok, Rome, Frankfurt, Hong Kong, Moscow, Paris and London and just this week launched nonstop service from Miami.
EL AL is continually working to improve the passenger’s flight experience. The carrier has introduced significant improvements in the standard of in-flight kosher meals and is making strides in upgrading in-flight entertainment. EL AL recently established a large and sophisticated customer service call center in Israel that can provide responses to all customer questions and problems. The center has 200 workstations and operates 24 hours a day, seven days a week. This year, EL AL upgraded its Web site, www.elal.com, and some flights now offer broadband Internet services.
EL AL is also expanding activities targeted toward the business traveler. During the past year, the airline introduced significant improvements in the flight standards of its First and Platinum Business Classes. EL AL replaced the Business Class seats in its Boeing 767, 757 and 737 aircraft. Its call center includes a special department to address the needs of business travelers, and EL AL is improving its customer frequent flyer club (Matmid), adapting them to the needs of these passengers. EL AL opened the second floor Gallery of the Business Lounge at Ben Gurion Airport and set up self-service rapid check-in kiosks for passengers carrying only hand luggage. Iridium satellite phones have also been installed on all long-range aircraft for passengers’ use and EL AL is developing added value packages for business travelers.