Flydubai Incident Boosts Israeli Airline Stocks
Translated & summarized from Israel Hayom by baba
The story in 5 lines · by baba
- Israeli airline stocks El Al and Israir rose 10% in two days after a Flydubai incident.
- The stock surge is linked to increased Israeli confidence in domestic security.
- Airlines may attract international customers due to their security reputation.
- Companies must reduce foreign wet leases to maintain passenger trust.
- El Al reported strong Q2 profits, while Israir incurred losses.
Following a near-disaster on a Flydubai flight that landed in Saudi Arabia on Wednesday, shares of Israeli airlines El Al and Israir saw a significant surge. The stocks climbed an additional 3% on Thursday, capping a 10% rally over two days. Market analysts attribute this rise to heightened security concerns among Israelis, leading to increased confidence in Israeli flight crews.
Furthermore, industry insiders suggest that the reputation of Israeli airlines in security matters could attract international customers, boosting demand for tickets globally. However, these same sources emphasize that the onus is now on the Israeli airlines to prove their enhanced security measures. They must reduce their reliance on "wet leases" of foreign aircraft and crews to solidify the sense of security for Israeli passengers.
A "wet lease" involves an airline renting an aircraft along with its operating crew, creating the impression of a proprietary service when it is not. The article notes that if El Al and Israir exploit the current situation to raise prices while continuing wet leases, they risk losing the trust they have recently gained.
El Al reported second-quarter revenues of 2.9 billion shekels, up from 2.6 billion in the same period last year, with a net profit of 374 million shekels compared to 208 million. The company's market value is nearly 11 billion shekels. Israir, a smaller company, had second-quarter revenues of 418 million shekels and a loss of 53 million shekels, compared to revenues of 462 million and a loss of 35 million in the prior year's second quarter. Israir's market capitalization is 413 million shekels.
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