Arie Egozi/TEL AVIV


Israel has effectively suspended preparation for the privatisation of El Al, causing the flag carrier's president Joel Feldschu to warn that its entire future may be under threat.

Feldschu says that while it remains under state control, El Al - which is banned from flying on the Jewish Sabbath - cannot compete with privately owned carriers and could ultimately see some of its routes transferred to its rivals.

Plans to float 49% of El Al are way down the Israeli Government's agenda, partly because of the opposition from conservative forces that any relaxation of the Sabbath rule - which is regarded as necessary before privatisation - would almost certainly provoke.

"The politicians do not want to go on with the process and in this situation El Al might reach a point where its existence will be questioned," Feldschu says.

"We will not be able to compete with other airlines if we are not privatised and free to operate our fleet in the most profitable way. In such a crisis, some of the rights will be taken from El Al and will be given to private airlines that have enhanced their operations in recent years".

Feldschu claims El Al loses $50 million a year due to the Sabbath ban, as evidenced by an increase in the traffic of rival carriers at weekends, and argues that his airline should at least be compensated for this loss.

El Al took an operating loss of $13 million last year due to rising fuel prices and changes in the dollar exchange rate.

It also had to finance new aircraft purchases, although it ended the year $16 million in the black thanks to gains from the sale of shares in Equant and profits from subsidiaries. Turnover in 1999 was $1.2 billion.

The airline is reportedly close to sealing a codeshare deal with American Airlines, having also recently implemented an agreement with Swissair.

• El Al is finalising the purchase of a 25% stake in North American Airlines for $800,000, taking its holding to 49.9%. An airline source says NAA is also planning a flotation to fund expansion. The New York-based carrier operates two Boeing 737-800s and two Boeing 757-200s.

Source: Flight International