El Al Stock Drops as Loss Widens on Growing CompetitionShoshanna Solomon
El Al Israel Airlines Ltd. declined for the second time in three days after the carrier reported a wider first-quarter loss and on concern competition and fuel prices will weigh on results.
The shares of Israel’s flagship airline declined 4.3 percent to 0.641 shekel at the close in Tel Aviv, trimming the company’s market value to 318 million shekels ($86 million). The company signed an agreement in April with Fimi Opportunity Funds for an investment of as much as $75 million, which helped push the stock 37 percent higher this year.
Fuel costs in the quarter rose 4.8 percent and its market share declined to 34.7 percent from 36.6 percent in the year-earlier period, the company said in an e-mailed statement today. The Israeli cabinet in April approved an accord with the European Union, designed to increase competition and lower fares by allowing airlines to fly to more destinations.
“The sector continues to be competitive and investment in the industry is seen as risky because it’s dependent on macro factors such as fuel prices,” Eyal Dabby, head of research at Bank Leumi Le-Israel Ltd., said today by phone.
The loss widened to $32.5 million from $23.3 million in the year-earlier period. The continued impact of the Pillar of Defense operation last year, which turned tourists away, and competition hurt the results, El Al said.