El Al Israel Airlines (ELAL.TA) is on the brink of making a long-awaited decision on an order for around 30 short-haul aircraft in the coming weeks, according to Chief Financial Officer Yancale Shahar. The airline is weighing its options between the Boeing 737Max and the Airbus A320 family, in what could be a $2 billion deal.
“We are at the last mile,” Shahar mentioned after an El Al news conference revealing its first-quarter financial results.
A Historic Change of Supplier?
Since its inception in 1948, El Al has maintained an all-Boeing fleet, reflecting Israel’s close ties with the United States. However, Shahar acknowledged that a shift to Airbus is still on the table, marking a potential historic change of supplier. “At the end of the day, you have to find the right asset for the company and the price that will make sense,” he said. “It’s finance. It’s economics.”
Last August, El Al revealed it was in “serious” talks with Airbus to purchase up to 30 A321neo jets to replace its aging short-haul fleet. Both Boeing and Airbus have since made aggressive proposals, making the decision even more complex.
Financial Performance and Fleet Replacement
El Al posted a first-quarter net profit of $80.5 million, a significant turnaround from a $34.4 million loss the previous year, on revenue of $738 million. The airline plans to replace its fleet of 24 Boeing 737-800s, which have an average age of 20 years, and 737-900s, while potentially acquiring another six aircraft. The purchases would be made in tranches.
Shahar noted that making a decision now is particularly challenging due to severe backlogs at both planemakers, meaning deliveries would be years away. “You have to make a decision according to a market that will be completely different,” he said.
The impending decision comes amidst market uncertainty, but El Al’s strategic move will undoubtedly shape its future trajectory in the competitive aviation landscape.
