El Al Israel Airlines (LY, Tel Aviv Ben Gurion) has agreed to cut cabin crew numbers to save costs, while the airline's pilots have backed the Israeli government's plan to save the company - by nationalisation if necessary. The transport minister, meanwhile, is pushing a plan for a Jewish businessman to buy the ailing carrier.
El Al said on June 25 that it had reached a deal with its union to reduce the number of permanent and temporary flight attendants and aviation managers, which would save USD30 million a year.
The deal is part of cost cuts the government is demanding if it is to bail out the privately-owned flag carrier.
Controlling shareholder Knafaim Holdings has been in talks for months with the country's Finance Ministry, which said it would guarantee USD250 million in bank loans - as long as El Al issues USD150 million in shares. The state would then buy these shares if no one else does, giving it majority ownership.
The airline has already extended unpaid leave for 5,800 of its 6,500 employees until July 31. Scheduled passenger flights have also been halted until this date.
Separately, on June 24, the 650 pilots of El Al clarified that they backed the ministry's plan to save the airline, the financial newspaper Globes reported. Saving the company is possible only by diluting the current owners' stake and nationalising the company, they said in a statement.
"El Al's pilots strongly demand that the board of directors fulfil their legal obligation and accept the Ministry of Finance plan to loan it USD250 million. The [...] plan will improve the capital structure of the company more than a USD400 million [bank] loan, which would only worsen [its] situation with no economic justification behind it other than protecting the controlling owners," they said.
Meanwhile, on the same day, Transport Minister Miri Regev said she had received multiple offers to buy the company but preferred that "good Jews" be prioritised in any purchase, the country's Channel 12 broadcaster reported. One of the businessmen, a former resident of Israel, had told her that he had studied the company for two months and now wanted to reach a deal with the Finance Ministry.
"If the stubbornness of [Knafaim Holdings owners] the Borovich family and the Finance [Ministry] continues, El Al will collapse," Regev said in closed discussions, according to Channel 12. "We need to allow good Jews that want to save El Al to enter the picture and to inject money, and quickly."
Rafi Danieli, a former chief executive of Haifa-based Zim Integrated Shipping Services, has been included in El Al's advisory team in its dealings with the Finance Ministry, according to local media reports on June 24.
