Aug 20, 2026 · 51 min
El Al’s wartime windfall tests the value of a durable moat
$ELAL: El Al is a wartime monopoly at 2x EBITDA. Is that a trap? | ASB Partners
El Al’s profits, cash generation, and scarce airport access look unusually attractive, but their durability depends on competition, government obligations, and customer-funded liabilities.
- 1El Al’s wartime profitability and deleveraging have transformed its balance sheet, but customer prepayments complicate the apparent net-cash strength.
- 2Scarce Ben Gurion slots and Israel’s concentrated travel market may protect El Al, though returning competitors could quickly test pricing power.
- 3Stride’s CEO transition, enrollment outlook, LMS problems, and AI concerns leave its investment case hinging on whether disruption proves temporary.
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The discussion tests whether El Al’s apparent net-cash position and wartime earnings represent durable shareholder value or customer-funded, conflict-driven strength.
The brief
Adam Buckstein joins Andrew Walker to examine El Al after a period of regional conflict reshaped Israel’s airline market, then revisits the investment case for Stride.
El Al’s cash generation and deleveraging look striking, supported by owned aircraft and scarce Ben Gurion slots; the counterpoint is that ticket prepayments and operating obligations dilute the headline strength.
The central valuation question is whether El Al’s protected local position can survive the return of international competitors, government intervention, and the airline industry’s notoriously uneven EBITDA quality.
The Stride update shifts from aviation to education: enrollment remains the key variable while a CEO change, LMS problems, and AI fears test confidence in the virtual K–12 model.
The episode’s sharpest tension is simple: El Al may possess a rare airline moat, but investors still must separate durable economics from profits created by an abnormal market.
What was said on this episode
22 statements · 17 positive · 4 negative · 1 mixed
El Al currently holds a near-monopoly position on transatlantic flights from Israel.
“El Al has found itself in this basically monopoly position on the transatlantic flight.”
Listen at 4:54
El Al is a high-quality asset likely to remain operating for decades.
“I think it's a very high quality asset type of thing that's going to be around 30 years from now.”
Listen at 5:26
El Al used three years of windfall profits to substantially deleverage its balance sheet.
“they've been able to just have three years of windfall profits that they've totally delevered the balance sheet.”
Listen at 7:24
Turkish Airlines and Pegasus have exited the market and will not return.
“Turkish Airways and Pegasus, which were top five carriers, they totally left the market. They're not coming back.”
Listen at 8:46
El Al retains significant net cash even excluding air traffic liabilities.
“they still have a significant net cash position on their balance sheet.”
Listen at 12:38
Even under normalized earnings, El Al could have $2 billion EV and $150–200 million free cash flow.
“worst case scenario, you know, let's say they go back to that, like you're looking at a two billion dollar EV and normalize, you know, at least 150 to 200 million free cash flow.”
Listen at 14:14
Owning more aircraft should justify a higher airline valuation multiple when leasing is expensive.
“the more planes you own in this environment, given how expensive leasing is, the higher your multiple should be.”
Listen at 15:59
El Al can operate under all circumstances and benefits from implicit government backing.
“they've proven that like they can fly under all circumstances and they have an implicit backstop of the government”
Listen at 16:19
El Al will eventually face full competition in its market.
“there's going to be full competition someday, like full stop.”
Listen at 18:59
El Al likely has at least two more quarters of windfall profits.
“you have a few more, at least, you know, two more quarters of like just gushing windfall profits”
Listen at 19:28
Israel is relatively capitalistic despite being a foreign investment jurisdiction.
“I think Israel is relatively, you know, capitalistic, insane.”
Listen at 21:43
The Israeli government shares El Al’s costs for mandated additional security.
“the government, you know, like, they basically share the cost for that extra security.”
Listen at 23:43
Aircraft leasing appears economically inferior to ownership for El Al.
“it seems very clear that leasing is not the optimal”
Listen at 28:28
James Ryu increased Stride EPS from under $1 to more than $8 during his tenure.
“under his watch, he had grown EPS from like less than a dollar a share to like, I think they did over $8 this year.”
Listen at 32:53
Stride operates in a growing market and generates substantial cash flow.
“this is a secular grower, an expanding marketplace, generates a lot of cash flow.”
Listen at 35:06
The virtual public-school market underlying Stride remains healthy.
“I feel strongly that you know the market is healthy”
Listen at 39:30
Stride will re-enroll most Lone Star Academy students in its other Texas schools.
“I'm very very confident that they're going to be able to enroll a large percentage of those students in the other schools that they have in Texas.”
Listen at 39:40
Stride is more likely than not to retain students affected by the Texas school closure.
“I just think that speaks to like my, you know, I think that's more likely than not that they're going to be able to retain those students.”
Listen at 40:29
AI software alone cannot replace Stride’s full online-school operating model.
“there's no way that like someone's going to just let, you know, a piece of like AI software come in and like run this thing.”
Listen at 45:28
Political risk for Stride has materially declined since COVID-19.
“the political risk has actually been dramatically reduced like post-covid”
Listen at 47:35
Online schooling has shifted from a nice-to-have to a must-have after COVID-19.
“this used to be like a nice have now it's a must-have”
Listen at 47:39
Stride’s probability of being acquired is below 75% but above 5%.
“I take the under 75 but I probably take over five percent”
Listen at 49:34
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
Featuring
El Al
Israel
United Airlines
Alpha SchoolBooks & mentions
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