Brazilian airlines, already struggling with high interest rates and volatile fuel costs, are being hit with more losses as currency woes and climate challenges test the sector’s operational resilience. Azul SA and Gol Linhas Aereas Inteligentes SA, two of the nation’s largest carriers, reported setbacks in the second quarter as a weakening Brazilian real and the closing of a key airport following torrential rains in country’s south dragged their earnings, quarterly reports showed this week. The real’s slide in particular — around 11% this year — has weighed on the carriers, which have grappled with rising fuel costs and high interest payments on their heavy debt loads. The weaker currency further raised fuel costs tied to the greenback and dollar-denominated lease payments last quarter. Catastrophic floods in May compounded the difficulties, paralyzing the state of Rio Grande do Sul’s main airport in Porto Alegre, which remains closed. “The exchange rate and operational disruptions in Porto Alegre affected the costs and flight supply of both Gol and Azul, leading to a negative impact on their operational performance in the quarter,” said Carolina Chimenti, an analyst at Moody’s Ratings. Gol shares fell as much as 7.8% in Sao Paulo Thursday, the most since May, after the company reported a net loss of 3.91b reais ($713m), reversing a profit seen in the same period of last year. The airline said the exchange rate variation made its gross debt swell by 2.7b reais, and cited the impact of a decline in passenger demand and capacity amid the closure of Porto Alegre’s Salgado Filho airport.<br/>
unaligned
While the state gave generous aid to Israel’s national carrier in the hard times during the Covid pandemic, El Al does not have to share its profits in the good times. The dominance of El Al Israel Airlines in Israel’s skies, after many foreign airlines have canceled flights to and from Israel due to fears of an Iranian strike, led to record net profit of $147m in the second quarter of 2024. With El Al able to charge high fares, second quarter profit was 84% higher than the net profit in the first quarter, which was itself "the best quarter in the company’s history." As the geopolitical tensions persist, El Al, controlled by US businessman Kenny Rozenberg and led by CEO Dina Ben Tal Ganancia, is expected to report very high profits in the coming quarters. In the first half of the year El Al reported revenue of $1.6b and net profit of $226m, up tenfold from the first half of 2023. It is hard to believe that four years ago, following the outbreak of the Covid pandemic, the airline’s very existence was threatened, as scheduled flights worldwide were suspended. Each new Covid wave led to a slump in demand, and huge losses, liquidity difficulties, with the auditors attaching a "going concern" qualification to the company’s reports.<br/>