The approval of the open skies agreement between Israel and the EU was the last blow for EL AL. At this point, Israel's largest airline will have to make some very fast and dramatic moves in order to survive.
The airline anticipated this blow, however, and in the last six months has been busy preparing an emergency plan, using help from external consultants.
The heaviest burden on EL AL is the number of employees. The management was not decisive enough - and did not confront the workers' committees - in a real effort to minimize the payroll.
By this point in time EL AL has a very limited list of options. One is closing the airline in its current form and reopening it as a low-cost carrier.
The other is continuing the current form of operations, but with most of the flights being operated to more lucrative markets - long-haul destinations such as New York, Los Angeles, Beijing, Mumbai and Bangkok.
If this option is selected, the short- and medium-haul destinations will be served by a low-cost subsidiary. Until last year, SunDor - a subsidiary of EL AL - operated low-cost flights. It also operated on the Jewish Shabbat, when EL AL is on the tarmac.
SunDor was closed after the Israeli civil aviation authority found out it does not have full registration as an airline. It is expected to restart operations in June, after fulfilling all the requirements.
So, it's the moment of truth for EL AL - which ended 2011 with a $49 million loss. If the current situation continues, it may force EL AL to a point where it will not be able to operate.
The decision must be taken soon, as the financial parameters have reached the "red" zone.
The airline anticipated this blow, however, and in the last six months has been busy preparing an emergency plan, using help from external consultants.
The heaviest burden on EL AL is the number of employees. The management was not decisive enough - and did not confront the workers' committees - in a real effort to minimize the payroll.
By this point in time EL AL has a very limited list of options. One is closing the airline in its current form and reopening it as a low-cost carrier.
The other is continuing the current form of operations, but with most of the flights being operated to more lucrative markets - long-haul destinations such as New York, Los Angeles, Beijing, Mumbai and Bangkok.
If this option is selected, the short- and medium-haul destinations will be served by a low-cost subsidiary. Until last year, SunDor - a subsidiary of EL AL - operated low-cost flights. It also operated on the Jewish Shabbat, when EL AL is on the tarmac.
SunDor was closed after the Israeli civil aviation authority found out it does not have full registration as an airline. It is expected to restart operations in June, after fulfilling all the requirements.
So, it's the moment of truth for EL AL - which ended 2011 with a $49 million loss. If the current situation continues, it may force EL AL to a point where it will not be able to operate.
The decision must be taken soon, as the financial parameters have reached the "red" zone.
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