El Al quarterly profit falls

El Al’s revenue in the quarter fell 8% from the corresponding quarter to $447 million which it attributes to a 31% drop in incoming tourism during the quarter
 
El Al Israel Airlines reported last Wednesday a sharp decline in third-quarter net profit as a month-long war with Hezbollah guerrillas in Lebanon drove tourism down 31%. El Al posted a quarterly net profit of USD$1.8 million compared with USD$52.2 million a year earlier.
 
El Al’s revenue in the quarter fell 8% from the corresponding quarter to $447 million, (from USD$485.2 million) which it attributes to a 31% drop in incoming tourism during the quarter.
 
In a statement issued last week the company said that it had to struggle with heavy operating costs because of salaries and a 30% rise in fuel costs, which nearly halved its third quarter gross profit compared to $73 million from $143 million in the corresponding quarter.
 
The company noted that it's operating profit was down to $4.3 million for the third quarter from $64.5 million for the corresponding quarter in 2005. The combination of these events has caused the company to implement a restructuring and cost saving program, which extends to both operational and fixed costs.
 
Part of the strategy will be to reduce flights or close unprofitable routes and focus on point of interest destinations such as the US and Far East markets and possibly South America.
 
The company's chief financial officer noted that El Al posted a net profit of $25.7 million in January-September period, down from $65.7 million in the corresponding period of 2005, although its revenue rose by 2% to $1.25 billion.