El Al blames fuel costs and 'open skies' for 2011 losses

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Israeli flag-carrier El Al has posted a net loss of $49.4 million for the full year 2011, a reversal of the $57 million profit achieved in the previous year.

The airline's revenues reached $2 billion but the increase was outstripped by an 11% rise in expenses, leading to a 28% fall in gross profit to $278 million.

Operating losses reached $43.3 million in contrast to the $88 million profit of 2010.

El Al says the main reason for the deterioration is the hike in jet fuel costs, and loss of market share owing to "aggressive competition" which it attributes to the implementation of 'open skies' policies in Israel.

It adds that political instability in the region and economic difficulties mean that the carrier has been unable to stem increases in operating costs. El Al says it expects financial and cash-flow challenges to continue during 2012.