Conflict between Israelis and Palestinians contributed to a sharp deterioration in El Al’s 2014 results, as the military action brought about a slump in tourist traffic to Israel.

The Israeli national airline recorded a net loss of $28 million in 2014, compared to a profit of $26.7 million the previous year. The result was achieved on revenue down 1% year-over-year (YOY) at $2.08 billion. Operating expenses rose 2.2% YOY to $1.79 billion. Load factor was 82.5%, compared to 82.9% in 2013.

"The results of 2014 reflect the effects of the ‘Protective Edge’ operation, which caused a significant decline in tourism and harm to El Al’s profits,” CEO David Maimon said. The second half of 2014 had seen a 20% drop in inbound tourism to Israel as a result of the conflict between the Israeli armed forces and Palestinians.

“In addition the increasing competition at Ben Gurion Airport resulted in an erosion in flight prices, and as a result, together with the increase in operations and increase in market share, there was also an increase in expenses which harmed profit margins,” Maimon said.

On the plus side, Maimon said, 2014 had seen the successful launch of El Al’s low-cost subsidiary UP and El Al’s new Boeing 737-900ERs had started to arrive. Among other developments had been the launch of a codeshare with carrier JetBlue, to give El Al passengers access to a range of US destinations.

CFO Dganit Palti added that the company had also been affected by its fuel hedging policy in the face of rapidly-declining oil prices and an adverse exchange rate between the dollar and the shekel. Together, these factors accounted for a $52 million negative shift in the annual accounts.

El Al’s passenger revenues declined by 0.9% YOY; revenue from cargo declined 1.7% YOY.

The company’s 4Q results, announced at the same time as the annual figures, recorded fourth-quarter revenue of $493 million, a decline of 1.2% compared to 2013, while net losses amounted to $14.8 million, widened from $3.7 million during the year-ago period.