El Al Joins Elite Stock Index Amidst Security Challenges

Israeli airline El Al, controlled by businessman Keni Rosenberg, will be included in the Tel Aviv 35 index, the stock exchange's flagship index, for the first time in its history. The recent surge in its stock, following the Flydubai incident, provided the final push needed to join the ranks of the largest companies on the stock exchange. The stock's inclusion will take effect in November.

Ironically, a period marked by turmoil in Israeli aviation, including security threats, airspace closures, and flight cancellations, has become a growth engine for El Al's market value. While Operation "Iron Swords" against Iran impacted El Al and other Israeli airlines, it also deepened the company's advantage over foreign airlines that had not yet returned to Israel. The attempted hijacking of a Flydubai flight in late September, which raised concerns about intentional harm to the crew and questioned the security of foreign airlines flying to Israel, further strengthened the expectation that passengers would prefer Israeli companies in the near future. Following this incident, El Al's stock jumped approximately 13% in two days, reaching a market value of about 11.5 billion shekels, securing its place in the prestigious index.

El Al's financial reports also reflect investor confidence. In the second quarter of 2026, the airline reported revenues of $986 million, a 27% increase year-over-year, with net profit doubling to approximately $132 million. Despite an estimated war-related loss of $55 million, El Al accumulated a net profit of about $1.04 billion from the start of the "Swords of Iron" war through the end of the second quarter of 2026.

However, El Al's entry into the Tel Aviv 35 index occurs while the company also faces regulatory and public image scrutiny. In February, the Israel Competition Authority announced its intention to impose a 121 million shekel fine, alleging excessive and unfair pricing during the initial months of the war. The authority's investigation indicated average ticket price increases of about 16%, with some destinations seeing hikes up to 31%. El Al has rejected these claims, but the real battle is for public opinion. The public is not receptive to price increases, even if attributed to rising fuel costs, increased insurance premiums, and unprofitable rescue flights.

While inclusion in the Tel Aviv 35 index is primarily a reputational and financial achievement that could increase stock exposure and demand from index-tracking funds, the business challenges remain. The key question is whether El Al can sustain its profitability as foreign airlines gradually return, competition for passengers intensifies, and security threats necessitate constant schedule adjustments and repatriation flights for stranded Israelis.