​El Al posts first Q1 operating profit since 2005
May 26, 2023
Israeli flag carrier El Al turned an operating profit of $9 million for the first quarter, representing a first positive result for this period in 18 years. EBITDA reached $60 million although the airline was still loss-making the net level, to the tune of $34 million. Passenger numbers and capacity were at 93% of their 2019 levels. El Al says it is working to return to pre-pandemic levels "and beyond". Revenue rose to 117% of the level seen in the first quarter of 2019. The result follows restructuring at the airline that has involved slashing of staff numbers and streamlining of operations following years of persistently weak earnings. It received a government bailout amid the Covid pandemic in 2020 that also sparked a partial change in ownership. El Al notes that it is now seeing stability in booking patterns, with profit bolstered by its streamlining efforts. Operating expenses excluding fuel actually fell compared with pre-pandemic levels, led by a reduction in headcount. The airline has also revealed a request for proposals from Boeing, Airbus and engine manufacturers for a narrowbody replacement programme starting from 2025, as part of a strategy of expanding its fleet to maintain market share. Currently operating 23 Boeing 737s, it is eyeing a narrowbody expansion to 28-31 aircraft in 2028. El Al's widebody fleet is scheduled to expand from 16 Boeing 787s in the third quarter of this year to 17 in the second quarter of 2024 and 22 in 2028. It also operates four Boeing 777s which it will run "until their retirement" with a retrofitting programme extending their service. The first refitted unit will enter service in the third quarter.

US DOT chief warns airlines to mitigate cancellations
May 25, 2023
The US Memorial Day weekend on 27 May that marks the start of summer travel will test the progress of airlines in preventing cancellations, US secretary of transportation Pete Buttigieg says, promising "pressure" if carriers show poor network management or customer service when disruptions happen. Airline travel in the summer in the USA, Buttigieg said on 23 May during a press conference, is poised to reach pre-pandemic levels. Cancellations and delays in mid-2022 were at "unacceptable proportions", exposing flaws in airline network management. There are signs of airlines reducing the rate of disruptions compared with the previous year, he says, noting that the US Department of Transportation has activated 169 new air traffic routes aimed at increasing network efficiency and reducing flight times along the East Coast. The DOT responded to the mass disruptions of mid-2023 by increasing scrutiny of how airlines respond to network troubles. The department aims to improve customer service for passengers "through collaboration where it's appropriate and pressure where it's necessary", the secretary says, adding "we are here to enforce passengers' rights and hold airlines accountable". “We are not going to prescribe every detail of customer service, but we are going to try to raise the bar,” Buttigieg says of the DOT's push for airlines to provide meals, lodging or refunds if carriers are to blame for disruptions. A proposed rule introduced by DOT for comment on 8 May would require airlines to compensate passengers stranded by a "controllable" flight cancellation. Trade group IATA has said the proposed rule "could raise unrealistic expectations among travellers". Numerous US airlines have reported record-high revenues in recent quarters but many of also noted that higher costs for fuel, labour and other expenses have offset those gains. In response to a question asked about any concerns from airlines that federal pressure could increase expenses Buttigieg says “these airlines can be perfectly profitable while treating passengers better”. Weather caused 58% of delays or cancellations between August 2022 and February 2023, according to data from trade group Airlines for America. Factors within the control of airlines including network and staff management caused 34% of the delays and cancellations during that time period. Around 8% of disruptions were caused by factors related to the National Airspace System (NAS) including shortages of federal air traffic controllers, but also a range of airspace management and safety issues.

​EU court backs Ryanair over Covid-era Italian aid
May 25, 2023
The EU General Court has agreed with a challenge brought by Ryanair that pandemic-era state aid provided to airlines by the Italian government and approved by the European Commission contravened competition rules governing the internal market. The decision dates back to an October 2020 decision to the Italian government to provide €130 million ($140 million) in state aid to national airlines during the pandemic. Ryanair argues this aid contravened EU state-aid rules, with the court deciding that the European Commission had failed to provide effective reasoning setting out why the aid did not break internal market rules. "According to settled case-law, a decision not to initiate the formal investigation procedure in respect of notified aid must set out the reasons for which the Commission takes the view that it is not faced with serious difficulties in assessing the compatibility of the aid at issue with the internal market," the court said in a statement, annulling the decision, adding: "The General Court finds that that has not been done here." The ruling mirrors a decision brought earlier this month by the low-cost giant against pandemic-era funds provided to Lufthansa and SAS. Ryanair argues that governments across Europe "rushed through discriminatory subsidy schemes" for their former flag carriers that amounts to a €40 billion subsidy that has a distorting effect on Europe's air travel market. "One of the EU’s greatest achievements is the creation of a single market for air transport," says Ryanair. "The European Commission’s approval of the aid scheme limited to airlines with an operating licence issued by the Italian state went against the fundamental principles of EU law. Today's judgment confirms that the Commission must act as a guardian of the level playing field in air transport and cannot sign off discriminatory state aid under political pressure by national governments. The court's intervention is a triumph for fair competition and consumers across the EU."


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