El Al Israel Airlines Ltd. Announces Its Financial Results for 2019 and Streamlining Measures to be Taken Following the Coronavirus Crisis

The pandemic led to a sharp decline in demand for passenger flights and resulted in a significant number of flight cancellations in February and March 2020 up to a complete cessation of passenger flights, in view of the government guidance on self-isolation, that caused the loss of substantially all of the Company's revenues and created a liquidity problem for the Company. The pandemic led to a sharp decline in demand for passenger flights and resulted in a significant number of flight...

The pandemic led to a sharp decline in demand for passenger flights and resulted in a significant number of flight cancellations in February and March 2020 up to a complete cessation of passenger flights, in view of the government guidance on self-isolation, that caused the loss of substantially all of the Company's revenues and created a liquidity problem for the Company.

The economic crisis was accompanied by a sharp decline in demand for oil that led to a drop in the fuel price and interest rates worldwide. Having performed jet fuel and interest hedging transactions, the drop generated losses to the Company, which was required to provide deposits in significant amounts to be used as collateral, thus aggravating the damage to its cash flow.

Due to the flight cancellations, the Company is required to make refunds to customers on a material scale.

To allow the Company to cope with the implications of the coronavirus crisis and immediately reduce the cash expenditure, the Company is currently implementing a series of streamlining measures:

The Company is conducting negotiations with lenders and with the Ministry of Finance to obtain a loan of USD 400 million, most of which will be backed by a state guarantee.

Given the uncertainty over the completion of said assistance, which is essential to allow the Company to address the consequences of the crisis at this stage, the Company estimates that there are significant doubts about its continued existence as a going concern.

El Al's CEO, Gonen Usishkin:

"El Al is one of the Israeli economy's most significant corporate casualties from the coronavirus crisis, and for this reason we asked the Israeli government to assist El Al as most countries in the world have done.  In the last two months the Company's management team has been working around the clock to implement a series of operational and financial measures aimed to reduce the Company's expenses, maintain its liquidity and allow it to operate. The Company had to halt its main operations, i.e. passenger carriage, in view of the government guidance, and it uses the wide-body passenger aircraft along with the cargo aircraft for extensive cargo operations. We established a streamlining program to allow the Company to operate in the coming years and return to profitability; however, these measures will not be sufficient without the Israeli government support."

El Al's CFO, Dganit Palti:

"We completed 2019 with an increase in revenue and gross profit. The Company reported a loss of approximately USD 60 million, which was also affected by the initial implementation of a new accounting standard. However, notwithstanding the loss, the Company generated unprecedented cash flow from operating activities totaling USD 294 million and completed the year with high cash balances of USD 264 million in its account. In view of the impact of the global crisis that paralyzed the aviation industry, El Al's passenger operations have stopped, and it found itself in a serious cash flow crisis. The Company took many steps to improve its liquidity, mainly by sharply reducing its expenses and suspending investments. Concurrently therewith, we carried out financial transactions to improve the Company's liquidity, inter alia, sale and lease back of three aircraft. We established a business plan containing profound streamlining measures that are currently in the process of implementation, and we expect the state's decision to provide a guarantee for a USD 400 million bank loan, that will allow the Company to return to growth and profitability."

 

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Key Financial Results:

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Profit and Loss for 2019:

Distribution of Operating Expenses for 2019:

The table below reflects the impact of jet fuel expenses on the Company's results, including the impact of hedging transactions:

For further information about jet fuel hedging, see Section B below. For further information about the impact of derivative financial instruments on the financial statements, see Note 18 to the financial statements.

Profit and Loss for the Fourth quarter of 2019:

The table below reflects the impact of jet fuel expenses on the Company's results, including the impact of hedging transactions

For further information about jet fuel hedging, see Section B below. For further information about the impact of derivative financial instruments on the financial statements, see Note 18 to the financial statements.

Balance Sheet as of December 31, 2019:

 

* Revenues from passengers and related revenues from scheduled and charter flights, excluding changes in exchange rates.

** Passenger aircraft, excluding financing expenses.

It should be clarified that reading the content of this announcement is not a substitute for reading the Company's financial statements as of December 31, 2019.

For further details:
Sharon Shani 
Head of CFO's office 
El Al Israel Airlines Ltd.
+972-3-9716770  
[email protected]

Amir Eisenberg 
Co-CEO, Eisenberg-Eliash Ltd. 
Investor and Public Relations. 
+972-3-7538828  
[email protected]