Historic supplier shift on the horizon as El Al engages Airbus in fleet expansion.

Key Points:

  • El Al Israel Airlines is discussing the potential purchase of up to 30 A321neo jets from Airbus.

  • A shift to Airbus would be a historical change as El Al traditionally maintained an all-Boeing fleet since 1948.

  • El Al's new strategic five-year plan aims to grow its fleet to 59 aircraft by 2028 and achieve a 24% market share at Ben Gurion International Airport.

TEL AVIV — El Al Israel Airlines is in advanced negotiations with Airbus for the purchase of as many as 30 A321neo jets, stated CEO Dina Ben Tal Ganancia. Such a move could represent a pivotal shift in supplier relationships, as the Israeli carrier has traditionally been allied with Boeing. This change is considered significant given Israel's enduring bond with its chief ally, the United States.

During a conference following El Al's quarterly report and in light of its 20th anniversary as a publicly-traded company after privatization, Ben Tal Ganancia highlighted these "serious" discussions with Airbus. "Both suppliers have been regularly visiting Israel, showcasing their business proposals for scrutiny," she remarked.

Simultaneously, the airline remains in discussions with its longstanding partner, Boeing, considering the acquisition of 737 MAX aircraft. While El Al's historical preference has been an all-Boeing fleet since its establishment in 1948, the A321neo's features — including more seating and an extended range — could potentially sway the decision.

However, this does not necessarily mean El Al will deviate from Boeing. Companies often request quotations from both major plane manufacturers. Boeing is expected to contest to retain its predominant position with the carrier.

This potential procurement comes as part of El Al's newly announced five-year strategic initiative. Under this plan, the airline intends to augment its current fleet of 46 aircraft to 59 by 2028. For shorter journeys, El Al is planning to supplant its 24 Boeing 737-800 and 737-900 jets, which average 19 years in age, and potentially procure an additional six.

El Al's vision extends beyond short-haul aircraft. The airline is actively updating its long-haul fleet, with 16 Boeing 787 Dreamliner planes in service and aims to have 22 as it diversifies its routes to Asia, Australia, and North America. Modernizations also include the retrofitting of four Boeing 777 aircraft for extended routes.

The recent addition of routes to cities like Istanbul, Dublin, and Tokyo exemplifies El Al's ambitions. The airline anticipates incorporating Mumbai and Fort Lauderdale to its destinations later this year.

By 2028, El Al aspires to garner $3.5 billion in yearly revenue, transporting 7.7 million passengers, thereby securing a 24% share of the market at Ben Gurion International Airport. In contrast, its 2023 projected revenue is $2.4 billion, a notable increase from $2.0 billion in the previous year. Despite challenges, including a net loss in Q2 of 2022 and rising salary expenses, the airline reported growth in revenue and maintained a competitive market share at Ben Gurion International Airport.