Arie Egozi/TEL AVIV

As the Israeli Government attempts again to thrash out agreement on privatising national carrier El Al, the thorny political issue of whether to end its costly ban on Sabbath flights remains high on the agenda.

A decision on the long delayed privatisation was due to take place at the start of April, but the meeting ended without agreement and a decision was postponed for two weeks. A fresh meeting is pencilled in for 22 April, although Israeli sources suggest that a decision could be delayed again with still no resolution over the sensitive issue of flying on Saturdays and other Jewish holy days, opposed by Israel's religious parties.

Shaul Yahalom, the transportation minister, has made it clear that he wants the ban to remain and for the Government to retain control of the airline, with only 49% of shares to be floated on the stock market. That opposition is despite last year's Government report suggesting a full sale.

Sources within the airline believe that, without a clear break from state ownership, the airline will remain "handicapped" in the international market. El Al president Joel Feldschuh warns that the cost of flying fewer than six days a week, together with the airline's heavy security costs, will place an extra cost burden of around $75 million on the carrier this year.

Nevertheless, the airline managed to show a modest $4 million profit for 1997, turning around a loss of $83 million the year before. The improvement, which came despite static sales of around $1.2 billion, is attributed to the easing in fuel prices, stronger US dollar earnings and also by a re-organisation of the airline. Another small profit is expected this year.

Meanwhile, the airline's new management team is pressing ahead with major changes. Feldschuh, himself a former fighter pilot, has appointed two other ex-air force officers to key positions in the airline as part of a management overhaul. "We want results, and fast.Time is one resource we don't have," he says.

Fleet renewal is already under way with a deal to purchase five Boeing 737-700/800s and plans for replacement of the medium and long haul fleet. The next competition will focus on the choice of a 350 seat aircraft, with the Boeing 777 and Airbus A340 in the frame.

"Our current fleet cannot answer our needs," says Feldschuh, pointing to ambitions to offer higher frequencies and more direct flights to destinations in North America and the Far East, such as . Toronto and Los Angeles.

Co-operation with other airlines is also on the agenda, although political blocks remain. A codeshare agreement with American Airlines, signed two years ago, has been left on hold as El Al fights to prevent KLM and Northwest operating a third party link on flights between Amsterdam and Israel. Allowing the deal would open the floodgates to a host of other such deals, says Feldschuh.

An agreement has been put in place with Lufthansa Cargo to use El Al's cargo capacity between Frankfurt and Tel Aviv. "We are willing to enhance this co-operation to passenger traffic," says Feldschuh, confirming that there are also talks with Air France.

Improved yield management is another target, highlighted by the traffic fluctuations that followed the Gulf crisis. An unidentified US company is building a yield management system for El Al.

Source: Flight International