El Al is negotiating a possible takeover of Tel Aviv-based Israir and could absorb the airline’s assets into either its charter or low-cost divisions.

“We are checking the option of merging Israir with Sun D’Or, our charter company,” chief executive David Maimon tells Flightglobal.

“There’s a lot of options. One is to increase the charter [services at Sun D’Or]. Second will be [utilising] the infrastructure for a low-cost carrier. So everything could be considered…it’s premature to decide if it will work.”

Maimon says Israir’s tour operator, Natour, could also plug a gap in El Al's product offering.

Israeli daily Ha'aretz last month reported El Al had begun preliminary talks over a possible deal for Israir. The latter is owned by IDB Tourism Group.

Israir’s fleet comprises two Airbus A320s and two ATR 72s. Though not a natural fit for El Al’s low-cost brand Up – which deploys four Boeing 737-800s – a merger could unlock cheaper labour costs at the low-cost division.

El Al launched Up in March last year following the signing of an open-skies agreement between Israel and Europe. Up took over the mainline unit’s routes from Tel Aviv to Berlin, Budapest, Kiev, Larnaca and Prague.

Maimon says the unit’s performance to date is “close to our budget”, although Kiev traffic is weak due to the conflict in Ukraine.

He rejects suggestions that Up has an uncompetitive cost-base for a budget carrier, pointing to savings from simplified on-board service, reduced crew complements, and a 20% ground-handling discount overseas.

“The only thing that is not reduced is the salary of the pilots and the other staff,” he says, adding that cuts may be considered “in the future”.

Source: Cirium Dashboard