With its business improving and the going concern qualification removed from its financials, El Al Israel Airlines (TASE: ELAL) is implementing its plans for expanding its aircraft fleet. Last month, El Al announced its intention of raising its output capacity with another Boeing Dreamliner. The company now reports that it has made a formal offer to buy a Boeing 787-9 Dreamliner.
Under the offer, El Al will buy the plane from Boeing equipped with two Rolls Royce Trent engines. It was originally manufactured or another customer, and will undergo adaptation for El Al. This will be El Al’s seventeenth Dreamliner. It is due to be delivered in the second quarter of 2024.
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El Al has also signed an agreement on the revised delivery date for a Dreamliner 787-8, the sixteenth plane in the wide-bodied aircraft procurement deal it signed in the past. This plane was due to have been delivered to El Al two years ago, but its delivery was deferred because of the Covid pandemic. It will now be delivered in the third quarter of 2023.
The parties have also agreed on a sum of credit that Boeing will extend to El Al for goods or services, and they have waived all claims against each other in connection with the late delivery of the sixteenth Dreamliner. El Al says that, under the two agreements, the sixteenth and seventeenth Dreamliners will cost some $230 million altogether.
El Al’s current Dreamliner fleet consists of twelve 787-9s and three 787-8s. Three of the 787-8s and four of the 787-9s were bought by El Al. The remaining eight Dreamliners are operated by El Al under dry leases, that is, without crews.
El Al is examining several possibilities for financing the purchase of the two new aircraft. The airline says that the Dreamliners will enable it to develop its route network and to fly to more distant destinations, among them Tokyo and other destinations in the Far East and more destinations in the US.
El Al CEO Dina Ben-Tal Ganancia said, “The purchase of the seventeenth Dreamliner and the expansion of the company’s fleet with new planes represents another significant milestone in El Al’s process of growth and renewal.”
El Al has a market cap of NIS 620 million, after a 7% rise in its share price since the beginning of 2022.
Published by Globes, Israel business news – en.globes.co.il – on December 18, 2022.
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