March 13, 2019 / 8:30 AM / 5 months ago

Israel's El Al Q4 loss widens as low cost competition bites

JERUSALEM, March 13 (Reuters) - El Al Israel Airlines reported a wider quarterly loss on Wednesday, citing higher fuel costs and increased competition that has shrunk its market share.

Israel’s flag carrier said it had made a loss of $32 million in the fourth quarter, compared with $30 million a year earlier. Revenue slipped 3.7 percent to $493 million, while operating costs fell 4.4 percent to $445 million.

Jet fuel costs rose nearly $15 million in the quarter.

El Al has met with stiff competition from rivals including Turkish Airlines, Aeroflot, easyJet and WizzAir, which offer lower fares even though some flights require a layover. It also competes with Delta, United and Air Canada on North American routes.

During 2018, El Al’s market share at Ben-Gurion International Airport fell to 25 percent from 28 percent.

Chief Executive Gonen Usishkin said the continued implementation of an open sky policy with Europe and the Israeli government’s decision to allow Air India to fly over Saudi Arabian airspace, while El Al cannot, weighed on its bottom line.

“With the replacement of (Boeing) 767 and 747 aircraft with (787) Dreamliner planes, the company will be able to realise the operational efficiency potential ... and contribute significantly to improving the product,” he said.

El Al is banking on a more than $1 billon overhaul of its long-range fleet to win back customers while also revamping its short-haul fare structure. By the end of 2019 it expects to add another six Boeing 787 aircraft to bring the total to 14 by the end of the year.

It said it planned to continue to expand its route network in 2019 with routes to San Francisco, Las Vegas, Manchester and Nice and to Chicago in 2020, while also refurbishing its 777 and 737 aircraft. (Reporting by Steven Scheer, editing by Louise Heavens)

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