Auditors removed a going concern warning against El Al Israel Airlines (LY, Tel Aviv Ben Gurion) this week after Israel’s flag carrier posted a quarterly profit of USD66.8 million and confirmed it had repaid a USD45 million loan it took from the government.

El Al’s revenue increased by 21% during the third quarter to USD626 million, which it said was due to rises both in demand and ticket prices - it saw a 25% increase in passenger numbers during the period - and reported a sharp increase in profit.

This was its second straight quarterly net profit, resulting from revenue that almost matched pre-pandemic levels (USD647 million in 3Q19). Load factor was 87.4% in the quarter, up from 70.3% a year earlier. It said in a results presentation that its “revenues for 3Q22 were about 97% compared to 3Q19 even though production capacity (ASK) was about 72%.”

El Al had already said in September that it planned to repay the government loan it took to fight the pandemic-induced slump in demand, two years ahead of schedule thanks to an improving travel environment.

Despite a 33% annual rise in fuel costs, the airline said it had been helped during the July-to-September quarter by a USD38 million one-time gain from the partial sale of its Matmid Frequent Flyer Club. Israeli financial services firm Phoenix exercised its right to buy a 19.9% stake in the loyalty business in mid-September for USD14 million. The USD66.8 million profit compares with a USD136 million loss for the same quarter a year earlier, and it was this that prompted auditors to remove their going concern warning.

Auditors initially attached, in May 2020, a going concern warning to the privately-owned carrier’s annual report for 2019. These doubts continued, for example, with the release of its third-quarter results in late November 2020 when El Al posted a loss of USD147 million on the back of a 94% drop in revenues year-on-year, in contrast to a net profit of USD27 million a year earlier. Auditors issued another going concern warning when the airline posted a net loss of USD80 million for the second quarter of 2021. Narrowing losses for the fourth quarter and full year did not stop them from doing the same in early March 2022.

El Al has seen its market share shrink as foreign carriers enter the market, but it said it would soon be completing a new growth strategy.