El Al reported $11.2 million in losses for the second quarter of 2008, despite record revenues of $557m., blaming the losses on rising fuel costs. "During this quarter the company operated under the shadow of the increasing world crisis assailing civil aviation and under the effects of the increasing fuel prices, as well as the constant escalation of interest by foreign scheduled and charter airlines in flying to Israel," El Al chairman Israel Borovich said Thursday. "In spite of the world crisis and in spite of the fuel prices and the erosion in currency exchange rates, the company succeeded in facing up to the changes and overcoming the challenges forced upon it by the situation," he added. According to the company's second quarter report, El Al's gross profit totaled $71.8m. It also wrote an operating loss of $17.7m., compared to a profit of $27.1m. in the same quarter last year. The second quarter loss of $11.2m. was in sharp contrast to the profit of $16.6m. the company enjoyed in the same quarter of 2007. Still, by the end of June the company's cash balance stood at $279.2m., with a positive cash flow from regular activities of $68m. "The revenue growth is a result of the continuation of implementing the 'El Al 2010' strategy and the continuing growth and investment that signify El Al's ability to face up to the challenging changes in international and local aviation," company president Haim Romano said. "Within the framework of our efforts to increase efficiency and to establish additional growth engines, ticket sales on the Internet and call centers improved, and totaled $31 million, an increase of about 113 percent," he said. "In addition, we increased the number of available seats and increased flight hours. Thus, passenger numbers increased, as did our share of the premium-passenger market." Romano said El Al was forced to deal with the non-implementation of a government decision early this year to finance 80% of the security expenditure of Israeli airlines.