El Al Airlines has announced its financial results for the fourth quarter of 2023, revealing a significant surge in profits amidst the disruptions caused by the war with Hamas. The conflict, which led to the suspension of flights by foreign airlines to Israel, inadvertently bolstered El Al’s position in the aviation market, turning it into a virtual monopoly within the country.

The company’s market share skyrocketed to over 80%, a remarkable increase compared to its previous share of about 22%. This dominance translated into robust financial performance, evident in the reported results for both the fourth quarter and the entire fiscal year of 2023.

Despite initial concerns about adverse effects from the war, El Al experienced heightened demand for its flights, surpassing early estimates. This unexpected surge, coupled with other factors, contributed to a remarkable 370% jump in profit for the fourth quarter. Total revenues for the year increased by 26%, reaching $25 billion, with fourth-quarter revenues soaring by 21% to $677.8 million. Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs also saw a substantial 58% increase compared to the corresponding quarter last year, totalling $161 million.

El Al’s positive trajectory predates the commencement of war, with the company already witnessing improving revenues and profitability in previous years. Strategic initiatives such as efficiency plans, new wage agreements, and workforce optimizations have contributed to this turnaround, culminating in the removal of the “going concern” note from its financial reports a year ago.

The company attributes its recent success to several key factors, including increased activity and capacity, adjustments in business objectives, cost-saving measures such as the decrease in fuel prices, and a significant uptick in cargo flying. Despite these gains, El Al still faces challenges, particularly as international airlines gradually resume operations in Israel.

The return of foreign carriers poses a threat to El Al’s market dominance, evident in the recent fluctuations in its stock price. United Airlines’ announcement of plans to resume flights to Israel caused El Al’s stock to plummet by 14%. While some airlines, like Turkish Airlines and Ryanair, remain hesitant to return due to political reasons, others, including Wizz Air, easyJet, and Air India, are expected to resume operations imminently.

In response to these challenges, El Al has initiated strategic manoeuvres to expand its customer base, such as its reserve operation, which distributed 18,000 flight tickets to reserve personnel. The effectiveness of these efforts remains to be seen as the airline navigates the evolving aviation landscape in the wake of the current security situation.

Image credit: El Al airplanes (Moshe Shai/Flash90)