ARIE EGOZI / TEL AVIV
A new coalition government in Israel may open the way for the long-awaited privatisation of national airline El Al. With a more secular government likely after last week's election, religious objections to flights on the Sabbath would no longer carry as much weight, removing one of the main obstacles to a sell-off.
Provisional results of the general election last week suggest the new governing coalition will again be led by the Likud party of prime minister Ariel Sharon. However, the success of secular parties such as Yosef Lapid's Shinui could mean that the new government, when it is finally formed, will be entirely secular, possibly supported either by an alliance or a coalition with Labour, the main opposition party. This contrasts with the previous Knesset, in which a much smaller Likud party ruled in coalition with a number of religious parties.
In July last year the previous government approved a plan to privatise El Al based on the carrier's expected 2002 results. Newly appointed chief executive Amos Shapira expects net losses of only $31 million, compared with $85 million in 2001.
The plan is to sell 49% of the shares first, either on the Tel Aviv stock exchange or abroad, and then the rest at a later date. No timetable has been set,although Shapira is keen to sign a strategic partnership before the sell-off goes ahead.
One of the main obstacles so far to privatisation efforts was the opposition of the religious parties to El Al flights on the Jewish Sabbath.
"The new coalition is the key. If in this coalition the relative power of the religious parties will change, we may be able to start the privatisation process," a source in the state owned authority says.
There are other obstacles to the privatisation, such as union objections to the government's valuation of the El Al pension fund (Flight International, 16-23 July 2002) but the ban on the Sabbath flights seems the most serious one.
A senior El Al source says that privatisation is key to the future expansion of the airline.
Source: Flight International
