The writing is on the wall for El Al

The writing is on the wall in El Al’s headquarters at Ben Gurion airport, but nothing meaningful is changing.

Israel’s largest airline released its results for the first quarter of 2014 this morning. As expected, the carrier has an explanation for all the negative numbers in the report, but as always, it does not have answers for the real problems.

Losses reached  $39.7 million in the first quarter of 2014, up by 22% from a loss of $32.5 million in the same period a year ago.

Revenues were $415.4 million, down from $431.million in the first quarter of 2013, while load factors fell to 80.7% from 81.7%.

David Maimon,  El Al’s new president, explained that the results stemmed from growing competition in the market created by the Open Skies Agreement with Europe and the fact that the Jewish Passover holiday falls in the second quarter this year. These are facts, but Maimon continues to sidestep the main reasons for the airline’s losses.

The carrier is still flying only five and a half days a week in spite of having been privatised. When it was state-owned, the religious parties insisted on the fleet being grounded on Friday afternoons, but this practice has continued post-privatisation, with the rationale that if the carrier began flying on the Jewish Shabbat, religious passengers would take their custom elsewhere.

The airline has paid big time for this move and will pay even more now in the wake of the Open Skies Agreement.

El Al has failed to reduce its workforce and an investment fund that planned to acquire a big chunk of its shares walked away after it became clear that the airline’s management could not deliver the goods in the form of 900 job cuts. In fact, the number employees grew slightly in the first quarter, to 5,840 as at 31 March 2014.

And all this is happening at a time when the Israeli government has been covering 97.5% of the airline’s security budget since an agreement to end a strike by airport workers raised the contribution from 80% in April 2013.

In a new development, El Al workers this morning acted again in their fight to gain better working conditions. This time, the decision is to disrupt catering services on some flights. The move comes after pilots caused delays to some flights last week, claiming that they are overworked.

So basic problems have not been solved – in a market that is getting more competitive every month.

,

Leave a Reply