El Al records peak revenue as net income drops and stock falls

Israel's national carrier El Al announced record breaking revenue for the third quarter of 2026 on Thursday, even as its bottom line contracted. The financial results reflect a period of heightened activity and robust demand for air travel, yet the airline’s overall profitability decreased compared to the previous year.

The announcement coincided with El Al's official inclusion in the TA-35 Index. This benchmark tracks the 35 largest corporations listed on the Tel Aviv Stock Exchange. The airline has been a focal point of public conversation in Israel for several years, drawing criticism for high ticket costs while receiving recognition for sustaining operations during wartime periods.

For the third quarter, the company reported a net profit of $175 million, a decrease of roughly 14 percent from the $203 million recorded in the same period last year. Revenue, however, climbed 18 percent to reach a historic high of $1.27 billion, signaling increased operational activity despite the dip in net earnings.

Management identified higher fuel costs and currency fluctuations as primary drivers of the expense increase. These factors added approximately $135 million to the airline's outlays compared to the third quarter of 2025. Even with these added costs, earnings before interest, taxes, depreciation, and aircraft leasing expenses increased by about 3 percent to $367 million. This performance was aided by a 7 percent rise in revenue per available seat kilometer, a critical indicator of airline efficiency.

The decline in net profit was largely attributed to a one time expense associated with the revaluation of a phantom option. This form of equity linked compensation created a difference of approximately $24 million between the two comparative quarters.

El Al also expanded its operational capacity during the period. Available seat kilometers, which measures passenger capacity adjusted for flight distance, grew by approximately 9 percent following fleet expansions. Despite this added capacity, the airline maintained an average passenger load factor of about 95 percent, a figure largely unchanged from the same quarter in the prior year. This indicates that on average, only one in every 20 seats remained empty.

Demand indicators remain strong, with the airline's order backlog reaching approximately $1.1 billion at the end of September. This represents a 16 percent increase from the same period last year and includes advance payments for tickets and vouchers. The company also reported growth in its loyalty initiatives, with the frequent flyer club expanding to 3.78 million members, an increase of about 306,000. The number of FlyCard credit cards issued also reached roughly 561,000.

El Al declared a dividend distribution of approximately $116 million, marking the second such payment for the current year. CEO Levy Halevy credited the workforce for the airline's performance, stating that the achievements were only possible due to the professionalism and dedication of employees working both on the ground and in the air.

Halevy highlighted the airline's inclusion in the TA-35 Index as a testament to its financial resilience. He noted that despite rising fuel prices and an uncertain environment, the company continues to see elevated demand. He described the period as one of the strongest in the company's history, supported by a robust order backlog.

Investors, however, reacted negatively to the earnings report. El Al shares fell approximately 5 percent during Thursday morning trading, following a 3.7 percent drop on Wednesday. This decline came after a volatile stretch of gains. The stock had surged 15 percent on August 5 when previous results were released and gained another 17 percent by Wednesday. Over the last six months, the shares have risen approximately 45 percent amid significant price fluctuations.