El Al Israel Airlines Ltd. (TASE:ELAL) is seeking to capitalize on its positive performance in 2023 by raising hundreds of millions of shekels, according to Israel’s Globes newspaper. This fundraising, coupled with the recent purchase of three new Dreamliner aircraft, will solidify the resurgence of El Al, which is controlled by Kenny Rozenberg.
Benefiting from a unique situation
The funds raised, approximately $100 million, will have multiple benefits. El Al aims to improve its financial situation, achieve a positive equity value, and thus be included in the main indices of the Tel Aviv Stock Exchange. Similarly, the capital raising would help repay loans granted to the airline by Rozenberg, without diluting his stake in the company.
Soaring stock price and financial results
In recent months, El Al’s share price has risen sharply, trading at levels not seen since before the pandemic, Globes reports. Since the beginning of 2024, El Al’s shares have risen 48%, reaching a market capitalization of NIS 1.3 billion. This rise is even more remarkable considering that after the outbreak of the war in October, El Al’s market capitalization had halved.
This extraordinary rebound, according to Globes, is largely due to El Al’s unique position at Ben Gurion Airport. The airline has become one of the few options for traveling to and from Israel, with many popular foreign airlines (including low-cost carriers) still suspending their flights. This has allowed El Al to maintain high fares.
New aircraft and big ambitions
The announcement of a preliminary order for three Boeing 787-9 Dreamliners worth a total of $650-730 million has been key. The delivery, scheduled for 2029-2030, is part of an ambitious fleet expansion that could reach 28 aircraft.
The road ahead
The capital to be raised could help finance the purchase of the Dreamliners. In the short term, it will also help repay loans made by its controller Kenny Rozenberg (who owns about 48% of the company) to El Al in 2021-2022.
The public offering, if successful, will strengthen El Al’s financial position. Globes mentions that despite earning $117 million in net profit in 2023, El Al still has a negative equity. A large capital raise and continued earnings this year would allow the company to move into positive equity. El Al anticipates inclusion in the Tel Aviv 125 Index, thus increasing its attractiveness to investors.
El Al’s current passenger aircraft fleet consists of 12 Boeing 787-9s (plus 3 pending delivery between 2025 and 2026), 4 Boeing 787-8s, 5 Boeing 777-200ERs, 8 Boeing 737-900ERs, and 16 Boeing 737-800s. This is complemented by one A300-600RF and one Boeing 737-800SF freighter.
According to Cirium, during the second quarter of 2024, El Al projects an 8.6% growth in capacity offered (in ASK), a 5.1% growth in seats, and a 6.1% growth in the number of scheduled flights compared to the same period of 2023.
