Israir with a difficult quarter: loss jumped to 18.5 million dollars
In the second quarter of 2026, Israir Group recorded record revenue, but Operation "Lion's Roar", the strengthening of the shekel, and a jump in fuel prices made it a loss-making quarter. At the same time, the company received approval to sell tickets for direct flights to New York - the first entry of an Israeli competitor into one of the most profitable routes in the world.
Israir Group published its reports for the second quarter of 2026 - part of a half-year that the company itself defines as one of the most challenging in its history. The bottom line for the quarter presents a complex picture: on one hand, record revenue of 140.7 million dollars, slightly higher than the 137.2 million dollars in the same quarter last year.
On the other hand, gross profit plummeted to only 1.4 million dollars (1% of turnover) compared to 10.4 million dollars (7.6%) last year, and the company moved from a net loss of 10.4 million dollars to a deeper loss of 18.5 million dollars.
The gap between high revenue and low profitability is explained by a combination of extreme events. Operation "Lion's Roar" - the military campaign against Iran that began on February 28 and lasted about 40 days - severely disrupted commercial activity.
The total damage from the operation is estimated at about 26 million dollars, including loss of revenue, passenger compensation, costs for parking aircraft at Ben Gurion Airport due to the presence of US Air Force aircraft, and costs for fuel and crew stays abroad.
To this were added two macroeconomic pressures. First, the strengthening of the shekel: the dollar exchange rate fell to 3.04 shekels on average for the quarter, and since Israir's revenues are mainly in dollars while a significant part of the subsidiaries' expenses are in shekels, a gross erosion was created.
Second, jet fuel prices - a central component of expenses - jumped due to the war and the closure of the Strait of Hormuz, with the price of fuel in April reaching a peak of 1,640 dollars per ton. Fuel expenses in the quarter jumped by about 96% compared to the same period.
Excluding extreme events, the quarterly gross profit would have been about 18.5 million dollars - very close to last year's level.
Beyond the bottom line, investors are examining operational metrics. Israir's market share at Ben Gurion Airport in the quarter rose to 12.7% compared to 11.4% last year - an improvement resulting, among other things, from the fact that foreign airlines returned to operations only gradually. The EBITDAR (operating profit plus depreciation, rent, and share-based payments) turned negative and stood at minus 7.4 million dollars compared to plus 4.2 million last year.
The data in the report indicate an erosion in the average price per flight hour, which resulted from a decrease in occupancy rates during the operation period. However, the company reports an order backlog of about 183 million dollars as of June 30, about 43 million dollars higher compared to last year, and signals that demand returned quickly with the end of the fighting.
The significant story in terms of the future is Israir's entry into the long-haul flight sector. On August 14, the company received a letter from the US Department of Transportation authorizing it to begin selling tickets for flights to the United States, with departure dates starting from October 19. The approval is still conditional on receiving the full operating permit from the Federal Aviation Administration (FAA), and therefore Israir is committed to a full refund or an alternative flight if the flights do not take place.
Until today, the only Israeli airline that operated on the route to the US was El Al - and now Israir is introducing competition. The high profitability of Israel-US routes is known: with the outbreak of the war on October 7, major American airlines noted that if routes to Israel were not renewed, they expected a decrease of about 25% in their profits. Since quantitatively, routes to Israel constitute a relatively small share of their total supply, this statement illustrates how particularly profitable these routes are.
For this activity, Israir purchased two Airbus A330 aircraft at a cost of 74 million dollars, with external financing of 41 million dollars. The company estimates that increasing supply and opening sales to the US will increase the order backlog and cash flow in the range between 20 and 40 million dollars.
Despite the difficult period, Israir presents an ambitious target of 3 million passengers and crossing the billion-dollar revenue threshold in 2027, an increase of about 45% in revenue and about 25% in passengers compared to 2025. In the second half of 2026, it expects a turnaround: government support of 4 to 8 million dollars due to the war, a positive impact from opening the New York line, and a typical seasonal rise in prices.
A point worth noting: the purchase of the aircraft increased the total balance sheet and caused a temporary decrease in the equity-to-net-balance ratio, which stood at 15.1%. This deviation requires a temporary interest rate increase of 0.25% for bondholders (Series A) - an increase from 4.75% to 5% - until the publication of the third-quarter reports. The company estimates that it will then return to full compliance.
The Board of Directors determined that the working capital deficit of about 175 million dollars does not indicate a liquidity problem, partly in light of a positive cash flow from current operations of 36.8 million dollars for the half-year.
The bottom line for the investor: this is a quarter affected by one-time events, while the business engine remains stable and the company is betting on a strategic move - entry into the profitable route to the US - which may change the profitability profile. The bet has not yet been proven and depends on FAA approval and actual demand.
