First Israel Mezzanine Investors Fund (FIMI) has cancelled its planned $75 million investment in El Al after the airline’s management failed to reach a new labor contracts.
In April FIMI, the country’s largest investment fund, agreed to invest in El Al in return for up to 47% of the carrier. El Al shareholders and regulatory bodies approved the bid, however, the accord was subject to the successful negotiation of a new labor agreement that was acceptable to FIMI. The deal was scheduled to close on July 31 and FIMI has extended the deadline twice.
“FIMI has informed El Al that it is cancelling the agreement to invest because the conditions had not been met,” El Al said in a statement to the Tel Aviv Stock Exchange on Oct. 10.
CEO Elyezer Shkedy had warned employees that the proposed FIMI investment was essential to El Al’s restructuring and ability to face increasing competition. An open skies agreement with the European Union will come into force next year.
Separately, EL Al this week took delivery of its first of six Boeing 737-300ER aircraft. A second aircraft is planned to arrive in December and all six will be delivered by early 2016.
The aircraft are configured with 16 business-class seats and 156 seats in economy. The new aircraft will serve El Al’s European network.