El Al reduced its losses in the second quarter by nearly 70 percent as it pushed ahead with a cost-cutting campaign, offsetting a continuing fall in revenue.
"El Al is faced with the reality that the global economy is in deep crisis, which is affecting the whole airline industry, while dealing with the complex geopolitical realities and conditions in the Middle East," chief executive Elyezer Shkedy said, citing the collapse of Malev and other small carriers.
El Al made a loss of USD$6.2 million in the three months, down from a loss of USD$19.7 million in the same period last year, on revenue down 3 percent at USD$517 million.
Passenger revenue slipped by 1 percent while cargo revenue fell 7 percent.
Operating expenses fell 7 percent to USD$439 million due to salary reductions that saved USD$23 million and increased government participation in security costs, although jet fuel costs rose 1.6 percent.
"The financial results show ongoing increased efficiency and careful management control over expenditures, thus managing to minimize potential losses," said Shkedy.
El Al said it reduced its workforce by 168 over the past year to 5,938 from 6,106 a year ago.
It is implementing a plan to lower costs and formulating a business strategy for the medium and long term that is set to be approved in the coming months.
Load factor rose to 82.3 percent from 81.1 percent, while market share at Tel Aviv Airport edged up to 33.7 percent.
Shkedy criticized a new open skies trade agreement with the European Union which will open up the market for flights between Israel and Europe.
Despite opposition from El Al, Israel and the EU agreed last month to the deal which will replace existing bilateral agreements between individual EU countries.
While still being subject to final approval, it will be phased in gradually over five years starting in April 2013.
"All we ask is to be able to compete on equal footing. At this time... fair and equitable conditions for competition for everyone do not exist," Shkedy said.
El Al said it was in talks to buy wide-body aircraft after it exercised options in June to buy two more 737-900 short-haul aircraft from Boeing. The airline, which has an all-Boeing fleet, is negotiating with Boeing for 787 jets as well as well as with Airbus for A330s.