The message of El Al Airlines President and CEO Elyezer Shkedy to employees last week was unambiguous: The failure to reach a new collective labor agreement is hampering the carrier's restructuring and jeopardizing the proposed investment by the First Israel Mezzanine Investors (FIMI) fund.
A turnaround is vital for El Al because next year the open-skies treaty between the European Union (EU) and Israel will come into force. It will not be a “big-bang-style” liberalization, but rather a gradual opening up of the EU-Israel air transport market over a five-year period. Still, the potential effects of the new open-skies environment will be a major challenge for Israel's airlines.
There are approximately 150 EU-registered airlines among the 28 member states, yet there are fewer than 10 in Israel, and all are quite small. El Al is the largest, with a fleet of just 37 aircraft serving 38 destinations. The carrier flies approximately 2 million passengers per year. More than 60% of its seat capacity is deployed on routes to Europe.