Arie Egozi/TEL AVIV
EL AL HAS APPROVED a new strategic plan in which the Israeli carrier will freeze a scheme to purchase new aircraft over the next five years and switch to a policy of leasing. El Al has previously purchased all of its aircraft.
The move is aimed at improving profitability forecasts, of the soon to be privatised airline, following the poor response by potential underwriters, to the flotation. The strategic plan, made soon after the carrier emerged from preliminary receivership in February, has been revised in a bid to improve cash flow and profit levels.
El Al has been evaluating the Boeing 777, the McDonnell Douglas MD-11 and the Airbus A340 as part of a large-scale fleet replacement and growth programme.
The decision not to purchase new aircraft is hoped to boost annual net profit to $50 million by the year 2000. One senior executive says that the previous strategic plan was based on losses caused by the planned investment in new aircraft.
Parallel to the revision in its strategic plan, El Al has hired Boston Consultants to evaluate the profitability of the airline's routes. The US consulting company has also been asked to assess the airline's value as part of the preparations for privatisation.
The US Federal Aviation Administration has demanded that routine inspections on El Al pilots operating flights to the USA be performed by outside examiners. Inspections are now performed by the Israeli airline's own pilots, authorised by the Israeli civil-aviation authority. An FAA report on the issue has gone to the Israeli Government, but Menachem Sharon, director of the Israeli CAA, says: "We have already begun to look for external inspectors that will be on our payroll."
Source: Flight International
