El Al ($ELAL), Israel's flag carrier, has spent three years as close to a monopoly on flying in and out of Ben Gurion as an airline ever gets. Turkish and Pegasus left and aren't coming back, Ryanair lost its Terminal 1 slots, Delta and United keep pushing their return, and El Al has used the windfall to go from a levered balance sheet to net cash, buy nine planes off lease, and start returning capital. It trades at about 2x EBITDA. Adam Buckstein of ASB Partners (back after his Stride episode) thinks you're buying a hard-asset-backed airline (roughly $1.3B net cash, $1B+ of owned planes, a $700M-ish loyalty program valuation) for less than the parts, with two more quarters of gushing profits still to come.
My pushbacks: every "delevered on wartime profits" story I can remember (steel, energy after 2022) didn't work as a stock; a chunk of the cash is customer float that vanishes if flights get canceled; the $40M competition-authority fine for wartime pricing plus the state's right to make them fly uneconomically looks like the worst of both worlds; and El Al flies 24/6 (no Sabbath, no holidays), so should you haircut the EBITDA, or does that create a moat nobody else can copy? We close with a Stride ($LRN) update: the abrupt CEO exit, the Canvas LMS disaster, the lost Texas school, why fall enrollments are the fulcrum, and whether AI is a real threat to virtual public schools.
Adam's El Al write-up: https://adambuckstein.substack.com/p/el-al-israel-airlines-ltd-elal-write
This episode is sponsored by Fiscal.ai: https://fiscal.ai/yav. Fiscal.ai is the modern financial data provider for global equities, and it's what I actually use: their fund-letter database is wired into their API, so the first thing my AI does when I prep a podcast is pull every recent letter on the name, and every line in the models it builds links back to the source filing. Use fiscal.ai/yav for 15% off their AI connector.
Chapters:
(00:00) Intro and Fiscal.ai sponsor read
(02:33) Adam Buckstein / ASB Partners joins
(03:38) What is El Al: flag carrier, October 7, a monopoly on Ben Gurion
(05:52) What the market is missing: underfollowed, delevered, Turkish and Ryanair gone
(09:36) My pushback: delevering on wartime profits, and the customer-float problem
(11:48) The balance sheet: $2B liquidity, air traffic liability, 2023 as the clean year
(14:22) Valuation: net cash, owned planes, loyalty program vs a $2B EV
(16:49) Slots: the New York City analogy for Tel Aviv
(19:28) State of Israel risk: golden share, the $40M pricing fine, mandated security
(24:23) The right comps: Wizz, Jet2, United at 6x vs El Al at 2x
(26:12) Flying 24/6: should you haircut EBITDA, or is it a moat?
(30:38) Stride ($LRN) update: the CEO exit and the prelim guide
(34:01) Fall enrollments as the fulcrum, Canvas LMS, the lost Texas school
(37:47) Pearson's read-through and in-year enrollment
(40:16) The new CEO's contract and expert-call feedback on the old one
(41:32) AI risk to virtual public schools, Alpha School
(46:02) Long school choice; would Stride get taken private?
(49:29) Disclaimer
Links:
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