The Israeli Government has issued its delayed decision on the privatisation of El Al, announcing that only 49% of the carrier's stock will be floated on the Tel Aviv exchange, and leaving the costly ban on Sabbath flying still unresolved.
The decision, which has repeatedly been postponed, was made on 1 June. As predicted, it stopped short of ceding state control and left in place restrictions on flying on Jewish holy days.
The airline management had urged for removal of the ban, which is estimated to cost the carrier around $50 million a year and is seen as a stumbling block to full privatisation as well as to international alliances.
A resolution was agreed, however, on the shortfall in the airline's pension fund, estimated to stand at around $100 million. It will be funded in part out of proceeds from the sale. The Government also agreed in principle to make a contribution to annual security costs.
The decision came as El Al revealed a substantial improvement in its financial performance, cutting losses last year to $4.2 million, down from $83 million in 1996, when the carrier took heavy restructuring charges. "We are optimistic about the airline's growth and profitability," says president Joel Feldschuh.
The improvement came on sales that grew by only 2%, to reach $1.2 billion. Although passenger numbers came close to hitting the 3 million mark, the workforce edged down by 90 to just over 3,400.
Source: Flight International
