El Al Israel Airlines (LY, Tel Aviv Ben Gurion) has reached two separate agreements with its administrative staff and its engineering employees that will save the airline USD88 million a year, local media reported on July 8.

The deals, designed to save USD52 million in the administrative sector and USD36 million in the maintenance wing, follows an agreement reached with its flight attendants two weeks ago that should yield annual savings of USD30 million.

Collectively, the three agreements will result in 1,700 fewer employees in its 6,500-strong workforce, including 1,300 under the latest pacts. Some will be laid off with “enhanced compensation packages” while others will be offered early retirement, the carrier said.

The announcement follows El Al’s acceptance of a bailout on July 6 that will probably put the company back in state hands. According to the recovery plan the cash-strapped carrier signed up to in exchange for the funding, the salaries of remaining employees will be cut by up to 20% and various benefits will be eliminated.

The two new labour agreements this week “have given a real chance to El Al’s recovery and to the possibility it will return to being the flag carrier of Israel’s aviation industry,” declared Avi Edri, chairman of the transport workers union at the labour federation Histadrut.

El Al CEO Gonen Ussishkin commented: “The agreements signed are another step on the road to El Al's recovery.”

Meanwhile, El Al confirmed in a press release that it had deferred some lease payments by mutual agreement, while leasing contracts for two B737-800s expected to enter service in 2020 were cancelled and three wet-leased aircraft were returned.

The airline also said it sold four engines in the first quarter of 2020 for a capital gain of USD10 million, and in June five more engines were sold for USD1.5 million. In addition, its planned B777-200(ER) fleet renewal has been suspended.