El Al 2025: How Much of the Frequent Flyer Club Value Really Reaches Shareholders
The main article treated the club as one of El Al’s key anchors. This follow-up shows that the asset did get stronger in 2025, but between a $280.2 million points liability, the Phoenix loan, and Phoenix’s 25% stake, only part of that value remains directly accessible to El Al shareholders.
Why This Follow-Up Matters
The main article treated the club as one of the anchors that softens the cyclical reading of El Al. This continuation isolates a narrower question: how much of the club’s value actually gets through the liability layer, the financing layer, and the minority-interest layer to El Al’s shareholders.
The answer starts with strong numbers. The club grew in 2025, earned more, and produced more cash. But anyone who jumps straight from the club subsidiary’s profit to a conclusion about accessible shareholder value misses three offsets: points that were sold but still sit as deferred revenue, a Phoenix loan with collateral and covenants on the club’s assets, and a partner that now holds 25% of the equity.
So the club is a good asset. It is just not an open cash box. Part of the value is deferred into future service, part of it remains tied to the financing structure, and from this point onward every future equity upside and dividend stream is already shared with Phoenix.
| Layer | Core figure | Why it is not a direct read-through to shareholders |
|---|---|---|
| Operating engine | $92.7 million of revenue, $52.5 million of net profit, $156.3 million of operating cash flow | These are club-level figures, not a one-for-one amount that lands at El Al’s shareholder layer |
| Deferred obligation | $280.2 million closing points liability | A meaningful share of the cash generated by selling points is still waiting for future redemption rather than becoming free profit today |
| Financing | $32.6 million Phoenix-loan balance at the end of 2025 | Debt, collateral, covenants, and acceleration rights still sit ahead of the equity |
| Ownership | Phoenix owns 25% of the club after February 2026 | Future dividends and equity upside no longer belong entirely to El Al |
The Club Really Did Get Stronger in 2025
The operating numbers are clearly stronger. Club membership rose to 3.552 million from 3.266 million at the end of 2024. The number of Fly Card cards rose to 518 thousand from 447 thousand. The identified purchase rate of club members increased to 54% in 2025 from 50% in 2024, and reached 57% in the fourth quarter.
The jump in earnings and cash flow was sharp: club revenue rose to $92.7 million from $66.5 million, net profit rose to $52.5 million from $9.0 million, and operating cash flow climbed to $156.3 million from $92.8 million. By the end of 2025 the club held $153.7 million of cash versus $19.4 million a year earlier, and its equity had risen to $324.8 million.
But this is where the reading has to slow down. The company explicitly says these figures come from the club’s separate financial statements and include, among other things, intercompany transactions, amortization of intangible assets, and financing expenses on intercompany loans. It also says the consolidated statements include many adjustments, so the consolidated numbers differ materially. That is not a footnote. It means the club is a strong economic engine, but its separate profit cannot be read as if it were clean cash already waiting to move directly to El Al’s shareholders.
The consolidated-income layer shows the same direction. Loyalty-program component revenue rose to $38.2 million in 2025 from $25.8 million in 2024, and the company attributes the increase mainly to growth in the Fly Card base, higher credit-card turnover, and a stronger shekel against the dollar.
Points Defer Recognition Rather Than Making the Obligation Disappear
The easiest mistake in reading the club is to assume that selling points is almost the same as booking revenue immediately. Note 13 shows that this is not how the economics work. When El Al sells a ticket that includes points, the consideration is split between the flight service and the points component. The amount allocated to the points is recognized as revenue only when the points are redeemed or used through another channel. Until then, it sits as deferred revenue. The same logic applies to points sold to business partners, where most of the proceeds are also recorded as deferred revenue.
That is exactly the gap between a good business and accessible value. The club sells points today, but a large part of that economics remains booked as an obligation until the company delivers a future flight, upgrade, product, or other service.
By the end of 2025 the points liability stood at $280.2 million, up from $236.6 million at the end of 2024. Out of that total, $189.3 million was current and another $90.9 million was non-current. During 2025 there was a $235.6 million increase in the liability from point accumulation, offset by a $192.0 million decrease from redemptions and expiries.
That number matters more than the attractive loyalty-revenue line. It shows that the club is generating strong economics, but it is also building a meaningful future obligation behind it. The closing liability is based on estimates: the selling prices of products that can be bought with points, the number of points required for each product, the product mix, and the company’s experience in forecasting point redemptions. So even if the club thesis is positive, it is a thesis about a business with deferred recognition and estimate-driven obligations, not about immediate clean profit.
Reading Note 13 together with Note 20 makes the point even cleaner. In 2025 the group recognized $38.2 million as loyalty-program component revenue, but that is already the number after the relevant liability creation. Anyone who looks at club growth and sees only cash or only profit misses the fact that a material portion of the value still sits as a future promise to the customer.
Phoenix Did Not Only Finance the Deal, It Sits Inside the Value Layer
The headline $500 million number from the original club transaction can also mislead. In 2022 the club activity and its assets were sold to the club subsidiary at a $500 million value, but the funding structure shows that this was never pure free cash landing at the shareholder layer: $226 million was paid through an issuance of shares to the company, $130 million was paid in cash sourced from the Phoenix loan to the club subsidiary, and the remaining $144 million was funded by a seller loan that El Al itself extended to the club subsidiary.
That is the core distinction between value and access to value. From day one, part of the headline value was funded through debt on the club’s assets and another part through intercompany financing. In other words, even when the framework spoke about a high value, it did not create $500 million of liquid shareholder value at El Al.
That financing structure still matters in 2025. The original Phoenix loan was $130 million for six years, with a stated interest rate ranging from 5.5% to 8% depending on financial-ratio compliance. But the company also says that because of the embedded option component, the effective interest rate on the loan was in a range of roughly 14.5% to 15.5%. Phoenix did not receive only a coupon. It also received an equity-conversion mechanism and a much richer economic return layer.
At the end of 2024 the loan term was shortened following a $30 million early prepayment, moving maturity to June 30, 2027. The amendment also reduced the club’s equity-to-assets covenant floor to 30% from 45%, and created a future credit line of up to $30 million on the same terms. As of December 31, 2025 the remaining loan balance was $32.6 million, the stated rate stood at 5.5%, and the club was in compliance with its financial covenants.
The more important point is the collateral package. The loan is secured by a floating charge over all of the club’s assets and rights, a fixed charge over the rights arising from the credit-card agreements and the intercompany agreements, and a fixed pledge over all of the club shares held by El Al, with those shares required to represent at least 51% of the club’s issued share capital throughout the loan period. So the club is not an asset that can be read as freely monetizable or freely distributable.
From 19.9% to 25%: Who Gets the Upside From Here
After the balance-sheet date, the picture became even clearer. On January 29, 2026 the company reported that all regulatory approvals had been received for Phoenix to exercise its remaining option to acquire another 5.1% of the club. On February 18, 2026 Phoenix exercised that option, the company received about $7.7 million, and Phoenix’s stake in the club rose to 25%.
The $7.7 million matters, but precisely because it is small relative to the broader story. It shows what actually reached El Al’s cash box for the final 5.1%. At the same time, the forward-looking conclusion is much cleaner: a quarter of the club’s future value no longer belongs to El Al.
Once the layers are put together, the real reading becomes straightforward. The club delivered high profitability, strong cash flow, and deeper customer engagement in 2025. But before El Al shareholders benefit from that value, three things intervene:
- Part of the proceeds from selling points remains a liability until future redemption.
- A Phoenix loan with collateral, covenants, and acceleration rights still sits on the club’s asset base.
- Any future value distribution is already shared after the 25% Phoenix stake.
That leads to the real conclusion. The club still improves the quality of El Al’s story, but not by the full amount that the first numbers may suggest. It gives El Al a stronger business, a deeper customer base, and a more meaningful loyalty engine. What it does not give is a full translation of the club subsidiary’s accounting profit or cash balance into immediately accessible value at the listed-company shareholder layer.
Bottom Line
If the story has to be reduced to one sentence, it is this: the club creates a lot of value, but less accessible value than the first numbers imply.
The club subsidiary’s net profit, the growth in Fly Card, and the jump in cash flow show that the asset is strong. The points liability, the revenue-recognition mechanics, the Phoenix loan, and the move to only 75% ownership explain why it is wrong to capitalize that strength as if all of it already sat in shareholders’ pockets.
In broader terms, the club remains one of El Al’s most important assets, but it now has to be read correctly: not as a clean cash box, but as a profitable loyalty business with a large deferred obligation, a dedicated financing layer, and an outside partner that will now take one quarter of the equity upside.
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