TOP 5 SECURITY TIPS FROM EL AL

5. El Al ignores political correctness

Critics of El Al’s practices like to denounce their passenger security checks because it includes racial profiling. While no one likes to admit that a certain small group of people tend to commit airline terrorism, the facts are facts. Little old ladies don’t get caught with shoe bombs. They have a policy of singling out young Arab men for extensive search procedures -- but that’s playing the odds. When there is a tight schedule, time doesn’t need to be wasted searching low-risk people.

4. Passengers are interviewed before boarding El Al flights

Psychologists believe very few potential terrorists are able to stay calm during direct questioning right before boarding the flight. People trained in interrogation are able to tell if passengers are nervous or lying. While airline employees may ask if someone packed their bags themselves, they aren’t trained to read a person’s eye movements and facial twitches. El Al staff are trained and ask the reason for a passengers trip, their job or occupation and whether they have packed their bags themselves. It still doesn’t take much time and could be the extra step needed.

3. Cockpit doors are reinforced on El Al planes

After Sept. 11, there was talk about reinforcing cockpit doors. While measures have been taken to improve pilots’ security, it is still not the highest it could be. There should be two doors to prevent entry by unauthorized persons. A secret code should be required to open the first door and the second door can only be opened from inside the cockpit. Also, there should be reinforced steel floors that separate the passenger cabin from the baggage hold, so just in case a bomb explodes in the cargo area, passengers have a better chance of surviving.

2. All El Al planes are outfitted with Flight Guard

In 2002, a terrorist group attempted to shoot down an Israeli airliner. After that, Israeli Aerospace Industries developed Flight Guard, an infrared countermeasures system that protects the plane from heat-seeking missiles. When the plane is landing or taking off, false heat targets or flares are shot off to confuse the infrared. This technology has been used since the Vietnam War, but El Al is the first to outfit civilian aircrafts with the system.

1. Air marshals are on each El Al flight

Just like the talk about reinforcing cockpit doors after Sept. 11, politicians made promises that air marshals would be on every flight. Currently, the rumor exists that marshals fly on only 1% of American flights. While the Transportation Security Administration states this is not true and will not report their number, there are still aren't marshals on every flight. Marshals hold the highest standard for handgun accuracy and are the last line of defence

FORMER EL AL'S SECURITY EXPERT ON ALTERNATIVE VIEW ABOUT MISSING MALAYSIAN PLANE

View of Former El Al expert on the missing Malaysian Airlines

IS EL AL ON THE RIGHT TRACK?

El Al has recently announced its annual report for 2013. For a lot of my fans who are also interested in EL AL, I thought I'd better update them with what is going on with El Al last year. However, please don't expect me to use 2013 figures in my spreadsheet because there is no way I am going to change what I have done for the assignment. Besides the full report is only available in Hebrew. I had to translate them using the translator. :)

• The 2013 net profit was $25.4m, compared to a loss of about $18m in 2012, an improvement of about $43.4m
• The company's revenues in 2013 totaled about $2.10 billion, compared to $2.02 billion in 2012, an increase of 4%
• Pre-tax profit totaled $37.5 million, compared to pre-tax loss of $23.1 million, an improvement of about $60.6 million
• Cash flow from regular activities in 2013 totaled about $185.3 million, compared to $78.3 million in 2012, an increase of about 137%

Based on the recent chart of El Al's share price (Bloomberg), the company seems like it being on track in its profitability. Market must have known something before end of year results for months, as shown on the following chart that El Al's share price has gone from $40 per share in September 2013 to almost $70 per share recently, an increase of 60% return. Interesting to see chart can show whether company will have a good year or bad year...Something to think about when I invest in share market, should I follow fundamental reports or should I invest based on technical reports??

A WAY OF VIEWING BUSINESS

I am sure everyone of us has been surrounded by lots of news about airlines as the event of Malaysian Airlines MH370 has been developed recently. For me, it is enough for me to do more study about El Al for now. Let me switch to something else more general - "A WAY OF VIEWING BUSINESS".

When I first enrolled in this accounting subject, I was like "Cool, I'm good with numbers so this should be easy peasy for me". And, few weeks later, how wrong am I?. Not much of dealing with numbers at all in this subject. And even when I was meant to go through the financial data of annual reports, I fell distracted.

Reading through the article " A way of viewing business", its interesting introduction has drawn my curiosity on what this article is all about. "What is accounting?" "Is accounting a game?" etc.

I really like the comparison the author quoted about accounting and a camera. I used to think accounting is what it is - record of accounts. Everything in accounting is guidelines, fixated and precise as a picture captured by a camera. Accounting is not just that. It is a "business model" and "an abstraction of business activities". As accounting is the backbone of any businesses, this explains why many directors and CEOs have background in accounting.

There are great examples about mixtures of businesses in a local area (Yeppoon) in the articles. What was the author's purpose in listing out so many small businesses in his local area? Businesses are creating values and exchange values with others businesses and add values to consumers. As a "soon-to-be" property developer, I now understand and it all makes sense to me why so many small businesses would like to open their shops near Woolworths or Coles or IGAs. Why? Because, in order to run a successful business, you have to understand the market, businesses around the local neighborhood and most of importantly, be on top of the numbers such as potential traffic flows, population, demographics etc. These essentially drives a business to improve and increase on revenues. Few years ago, I was involved in a small development project which we proposed a 1,500m2 shopping village. The block of land had 3 frontages. We approached IGA to open its business there in order to attract more smaller businesses such as bakeries, newsagencies, chemists, florists, liquor stores etc. The aim was to create a local small shopping village which all retail tenants benefits from each other and supports each others to be successful.

This article in particular and this accounting subject in general has helped me in thinking outside the square. What I used to do up to this point is read and summarize. Perhaps I have now found a new process which I enjoy: reading, thinking, analyzing and making comments. This process have helped me become a bit more analytical. So how to I approach new concepts from now on? I would definitely try to relate new concepts, new ideas to something closer to me, something around me in order to grasp a better understanding. "Accounting is not about number, it is an abstraction of business activities".

KCQs - EL AL'S POTENTIALS

From the curiosity of wanting to know where exactly Israel is on the world map, I was surprised by its great location, right in the middle of Europe, Africa and West Asia. (Israel is a little read line on the map)

I then further researched and found out Israel's GDP per capita is on the top 30 of wealthiest countries according to the IMF (International Monetary Fund), its GDP per capita is even higher than countries like Russia, Saudi Arabia (those are knowingly rich in resources and oil)

That GPD per capita makes a lot of sense to me when I read through El Al's annual reports which it stated the difference between incoming passengers are way less than outgoing passengers.

So why doesn't El Al take advantage of its wealthier population and increase more flights to other countries? Why don't the board of directors work strategically to increase more traffic right grants accessing more destinations? Why keep blaming on external factors? (Read more about risks affect El Al in my previous post).

Perhaps one of the competitive disadvantages El Al has, which prevents it from further improvement in long distance flights, that its aircraft fleet are aging. The newest aircraft are 777-200ER are averaging 10 years old. This makes it more difficult for EL Al to compete with the like Emirates Airlines and other new low cost carriers in the region.

Another question posed in my mind is that El Al Air, even though a national airline for Israel, is not a member of any global airline alliance, namely StarAlliance, OneWorld or Skyteam.

In short, despite of Israel's geographically ideal location and its wealthy population, El Al's board of directors have not made much focus on tackling its specific factors in order to improve profits.

KCQs - EXTERNAL OR INTERNAL RISKS HAVE MORE IMPACTS ON PROFITABILITY?

Somehow I always fall asleep every time I go through the financial reports and look at the numbers and all the financial jargons. I wonder if there is a better way of understanding the picture of a company without dwelling too much into numbers. Hence, I decide to read through business operation and developments over the years. Besides, I enjoy reading better than looking at data.

I find it is interesting that most of annual reports for aviation industries do put a lot of emphasis on general and external factors impacting its profitability. El Air, every year, "blames" the same factors:

(i) High competition from other airlines, especially from low-cost airlines
(ii) High fuel prices leading to higher input costs
(iii) Fluctuation in exchange rate
(iv) Unusual events such as epidemic, outbreaks or terrorists attacks etc.

Not a lot was mentioned in relation to the way the airlines were managed and the way that the board of directors made decisions, set policies and directions for the airlines. For example, in its annual reports, it blames interest rate increase affected its profitability. But what about admitting that the board has made the wrong decision in taking out a significant loan amount at VARIABLE rates to finance for new aircraft. Why did not they think about fixing the rate? Why did not they think about using interest rate swaps or futures to lock in the rates? I guess, it is commonsense that noone like to accept they make mistakes. But why make the same mistakes every year for the past 3 years???

Below is the list of external and internal risks factors and the effect of each risk on company's profitability (ranking as minor, moderate and major).

Interestingly enough, the company ranks majority of its specific-company risks are of material effect on profitability. However, there are not many strategic policies in place to overcome those moderate and major risks. Instead, years on years, it is convenient to blame of external factors for making losses. Perhaps, it is an industry standard which every other airlines does the same thing?

OPPORTUNITIES AND CHALLENGES

I am meant to discuss and post what I have learnt about this airlines in term of financial information. Instead, I have spent the whole night watching video clips about this airlines.

In regard to airlines industry, I believe there would be more challenges than opportunities. Think about our national airlines QANTAS. It has been making news recently with huge net income loss, massive job cuts and request for government help. Or else, Qantas will probably send all maintenance jobs overseas. Question would be raised that if Qantas can maintain its status as its the best in air safety. I am sure it would if it considers and implements what El Al Airlines has done recently. (Make sure you watch the video at the end of the article)

Elbit Unveils Laser-based Anti-missile System For Commercial Airliners – All El Al Jets Will Be Protected

I would recommend that you check with whichever airlines you will fly in the future to ensure if they have installed Anti-missile system. And if they don't, memorize the Travellers' Prayer:

"May it be Thy will, Lord of Heaven and Earth, to lead us to peace and safety. To fly us in peace and safety to our desired destination, to find life, joy and peace. Guard and watch us who fly the air routes and cross the seaways and travel overland passes. Make firm the hands that guide the steering and sustain their spirit, so that they may lead us in peace and safety. For in You alone is our shelter from now unto eternity. The Lord bless thee, keep thee, the Lord make His face to shine upon thee, and be gracious unto thee. The Lord turn His face unto thee, and give thee peace. AMEN" (El Al March 2014 Magazine)

HISTORY of EL AL AIRLINES

Well, I was going to post the history of El Al Airlines but falling bored half way in writing it so I deleted everything and thought what would be the best way to talk about a 60 year plus history of an airlines in couple of minutes.

And here it is, please sit back, relax and enjoy the commercial video as well as its history video.

El Al Airlines (in Hebrew means "To The Skies")

El Al through The YEARS 

EL AL ISRAEL AIRLINES

COMPANY BACKGROUND

• As the name suggested, El Al Israel is a national airline for Israel formed in 1948. 
• It owns 36 passenger aircrafts and 1 cargo plane.
• It employs approximately 6,000 people.
• It is listed in Tel Aviv Stock Exchange with a market capitalization of almost 300,000 NIS thousands or about US86 million dollars. (NIS is abbreviated for New Israel Shekel - Israeli currency)

FINANCIAL INFORMATION

• Airlines industry has been the hardest hit since global financial crisis in 2008 and most airlines are struggling to generate net profit.
• El Al's revenues over the past 3 financial years are steadily at USD 2 billion. However, its net loss is USD 20m and USD 50m in 2012 and 2011, respectively

ABOUT ME

I am Quoc Thanh Tu. I can be called by my middle name Thanh as it's easier to say than my first name.
I have recently moved down to Melbourne from Brisbane with a desire to start a career in property, either property developer or property valuation. That's the reason I am doing the course Bachelor of PROPERTY at Central QUEENSLAND University in MELBOURNE campus. Getting confused yet?

You could say that ever since my first flight to emigrate to Australia from Vietnam few years ago, I have been fascinated by aviation, especially El Al Airlines. Nah, just kidding. El Al Airlines is a company I have been assigned to do a thorough research on, particularly in the area of accounting. The aim is to develop our understanding in whether and how accounting can help us engage with the economic and business realities of this firm. Well, you just have to follow my blog for the next few months before I can give you an answer.

In my free time, I like to play golf. Why do I like golf? Well, it is the only sports that I can exercise, keep fit and at the same time, drink beer and have social smoke with friends. Keep fit and have fun. Awesome isn't it? Have a look at my golf tournament which I organised couple of years ago.

GOLF TOURNAMENT (it's 8 mins long, so there is a prize for the first person who can spot me in the video :))

I love to hear from all of you. If you have any questions, comments or if you would simply like to know more about me, write a comment below.

Bye for now!!