Israel's national airline says it'll spend $2.5 billion to buy 31 planes from Boeing

By Louis Goss

El Al Israel Airlines on Thursday said it will push ahead with a $2.5 billion deal with Boeing to buy up to 31 of the troubled manufacturer's 737 MAX planes in what marks the biggest expansion of the Israeli national carrier's fleet in its 76 year history.

The Israeli carrier's agreement with the U.S. manufacturer will expand its current fleet by up to two-thirds, in line with the airline's push to keep flights running to Israel after an assortment of top airlines suspended their services following the outbreak of the war in Gaza.

El Al first outlined plans in June to buy around 30 new Boeing 737 MAX planes over a period of several years, starting in 2027, following negotiations with both the U.S. manufacturer and its main rival Airbus (FR:AIR).

Boeing's website, which was not updated for the new El Al order, counts 228 gross orders this year.

Shares in El Al (IL:ELAL), listed on the Tel Aviv Stock Exchange, were down 3% on Thursday having gained 44% in the year-to-date. Boeing's (BA) New York listed shares were up 1% in Thursday's pre-market session having fallen 35% this year.

El Al has seen its sales surge since the start of Israel's war with Gaza as the carrier has captured the share of the market left behind by rivals including United Airlines (UAL), American Airlines (AAL), Delta Air Lines (DAL), and EasyJet (UK:EZJ) that have all suspended services.

"The implementation of the long-term procurement plan... once again demonstrates our commitment to the Israeli public and the state" El Al CEO Dina Ben-Tal Ganancia said in a statement. "El Al has a central role in ensuring open skies for Israel."

The recent surge in sales has, in turn, boosted El Al's profits and helped it rebound from a series of losses the Israeli national carrier suffered in the wake of COVID-19 - even as it has experience an uptick in costs related to security and disruption due to the war.

El Al was first formed by the Israeli government shortly after the country was first formed in 1948, in order to transport the country's first president, Haim Weizmann, to a conference in Switzerland, where local rules blocked landings by military aircraft.

The Israeli government currently owns just 5.94% of El Al, after the carrier was floated on the Tel Aviv stock exchange in 2003. American-Israeli investor Eli Rozenberg is currently El Al's largest shareholder after he acquired a 42.85% stake in the airline in 2020.

Rozenberg, who is the son of American billionaire Kenny Rozenberg, was just 27 years old when he acquired the controlling stake in El Al via a deal that saved the airline from the brink of bankruptcy.

-Louis Goss

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08-15-24 0657ET

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