EL-AL Conference Call Summary

2025-03-13 · epsilontal · Symbols: ELAL.TA
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HOLDING, NOT A RECOMMENDATION.

ASK Growth and Market Demand

The increase in ASK (Available Seat Kilometers) significantly contributed to financial results. The occupancy rate is the key story of the year—a 94% load factor reinforces the point I've emphasized before: occupancy rates have a more significant impact than ticket prices.

I've also mentioned that EL-AL can remain competitive even as foreign airlines return to Israel, thanks to its cash surplus exceeding its debt.

Q4 2024 Performance and Industry Trends

— Maintaining high EBITDAR and reporting a net profit of $130M in Q4.
— ASK growth is driven by fleet reactivation.
— Q4 occupancy reached 96%, an exceptionally high number by global standards.
— EL-AL is thriving while traffic at Ben Gurion Airport has declined significantly.
— Global demand for flights remains exceptionally strong—this is a worldwide trend, not just in Israel.

Revenue and Forward Bookings

— Since mid-2024, sales have stabilized above $1B per period.
— December 2024 - February 2025 bookings exceed $1.1B, with a continued strong outlook for Passover 2025.
— More available seats mean higher forward revenue projections.

Foreign Airlines’ Return and Market Adjustments

— Foreign carriers are gradually returning to Ben Gurion Airport.
— Capacity is expected to increase in 2025 compared to 2024 but will still be lower than pre-war levels.
— EL-AL expanded capacity between October 2022 and October 2023 by reactivating aircraft and optimizing its network.
— A gradual return of foreign airlines by July 2025 is anticipated.
— Foreign airlines’ return helps EL-AL by reducing pressure on operations and improving customer service.

Key Growth Drivers in 2024

— Increased capacity (reactivated aircraft and fleet expansion). — High occupancy rates (flights departing at full capacity).
— Strategic pricing management with fixed low-fare routes to meet demand.
— Controlled maximum fares in economy class.
— Support for security forces, hostages’ families, and reservists.

Shifting Consumer Preferences

— Customers prioritize security and are willing to pay for add-ons like PROTECT and flexible tickets.
— Revenue is driven primarily by ASK growth, high load factor, and cargo.

Key Strategic Goals

— ASK growth of 26%, increasing from 28 in 2024 to 35 by 2030.
— Revenue growth of over 20% to over $4B by 2030.
— EBITDAR margin target of 17-21%.
— Net debt-to-EBITDA ratio target of lower than 3.
— Cash balance to revenue ratio above 15%.

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