El Al Israel Airlines Ltd. Announced Today its Financial Results for the Second Quarter of 2018 and the First Half Year

The Company's (tase:ELAL) revenues in the second quarter of 2018 amounted to approx. USD 547 million compared to approx. USD 541 million in the second quarter of 2017, indicating a growth of about 1%;

Gross profit amounted to approx. USD 69 million compared to approx. USD 107 million in the second quarter of 2017;

Loss from operation amounted to approx. USD 13.7 million compared to a profit of USD 27 million in the second quarter of 2017;

Net loss in the second quarter of 2018 amounted to approx. USD 18.2 million compared to profit approx. USD 16.4 million in the second quarter of 2017;

Market share from passenger traffic at Ben Gurion Airport in the second quarter of 2018 decreased to approx. 26.7% compared to approx. 29.5% in the second quarter of 2017;

Aircraft Load Factor in the second quarter of 2018 stood at 83.5% compared to 84.3% in the second quarter of 2017;

The Company's available seat kilometer (ASK) increased by about 3% and revenue Passenger Kilometer (RPK) increased by about 2%;

Average total income per RPK (Yield) dropped by about 1%;

The Company's cash and deposit balances as of June 30, 2018 totaled approx. USD 280 million;

The Company's equity as of June 30, 2018 totaled approx. USD 267 million;

Cash flow from operating activities in the second quarter of 2018 amounted to approx. USD 56 million compared to approx. USD 101 million in the second quarter of 2017;

EBITDA amounted to USD 25.4 million compared to USD 70 million in the second quarter of 2017;

The Company's revenues for the first six months of 2018 amounted to approx. USD 1,007 million Compared to USD 959 million in the first six months of 2017, reflecting a growth of about 5%;

Loss from operation for the first six months of 2018 amounted to approx. USD 66.3 million Compared to USD 7.1 million in the first six months of 2017;

Net loss for the first six months of 2018 amounted to approx. USD 62.1 million Compared to USD 13.6 million in the first six months of 2017.

Gonen Usishkin, El Al's CEO:

"During the second quarter of 2018, EL Al recorded an increase in revenues compared to the second quarter of 2017, while coping with the challenges and the intensified and increased competition posed by foreign airlines, in particular low cost airlines.

During the second quarter of 2018, the Company dealt, among others, with the sharp increase in fuel prices, which was the main reason for the increase in expenses in the second quarter of the year.

We continue implementing our Dreamliner Acquisition Program. Thus far, we have received six aircrafts, the last of which arrived yesterday, and we are about to receive another aircraft by the end of 2018. Our Aircraft Acquisition Program is being implemented as planned, in line with the schedule agreed upon, and the Company continues to take the necessary steps required by the program. The demand for seats on Dreamliners is high and customer satisfaction meets the Company's expectations.

Sales of airline tickets to European destinations commenced in the second quarter for flights starting in October, based on our new sales model of which we have already announced. The new model allows the passenger to choose the flight package best suites to his needs, to all destinations in Europe, and pay for the package based on his choice. This model is expected to enhance EL AL's ability to more efficiently compete with all players in the European market, in particular, low cost airlines.

Once the pilot phase has been completed, we started offering Wi-Fi service on flights to Europe on 15 of the Company's airplanes, and we intend to expand the service to other airplanes and destinations.

EL AL's Frequent Flyer Club, both in Israel and overseas, and in particular the FLYCARD credit card, serve as a significant growth engine, which is translated into an impressive expansion trend. The number of credit card holders currently stands at about 280 thousand and the number of EL AL's Frequent Flyer Club members has now reached the 2 million mark. In the last month we announced a modification to the terms of accumulation and redemption of points by club members and credit card holders, which will be effective as of April 2019. This modification simplifies the accumulation method, which will now be based on cash expenses, and expands the possibilities to redeem points.

We keep accelerating the optimization of all wide-body aircrafts. To enhance customer service following the acquisition of the Dreamliner fleet, El Al is preparing for an early removal from service of the 767 aircraft fleet by the beginning of 2019."

Dganit Palti, El Al's CFO, noted as follows:

"In the second quarter of 2018, the Company recorded further growth in revenues despite the challenges of increased competition, expressed by the volume of traffic and the number of active players at Ben Gurion Airport. Alongside this, an increase in expenses was recorded, mainly due to the rise in jet fuel prices and the new Dreamliner aircrafts' lease expenses.

In June 2018, the Company took a USD 145 million loan from foreign banks and Japanese investors to finance the acquisition of the 787-9 aircraft received this month.

Furthermore, on August 10, 2018 the Company received another 787-9 aircraft under ownership, which it financed with a USD 125 million loan from a foreign bank, backed by a UKEF guarantee. With this, the Company has six aircraft of this model – three owned and three leased.

The Company's cash balances of USD 280 million and its cash flow from operating activities to be used for the continued implementation of the Acquisition Program."