El Al CEO David Maimon to resign amid tumbling stock price, loss in market share

By
November 7, 2017 18:47

El Al's stock has dropped 52% over the last year.

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El Al CEO David Maimon to resign amid tumbling stock price, loss in market share

An Israeli flag is seen on an Israel's El Al Airlines Boeing 787 Dreamliner jet. (photo credit:REUTERS)

El Al Israel Airlines Ltd. CEO David Maimon announced his resignation on Tuesday, after serving as head of the company for the past four years.

Maimon, who has worked at El Al for a total of 12 years, said he would continue to serve as CEO until its board selects a new head, as the company did not provide a date for his departure.

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The outgoing CEO did not say why he was leaving, but El Al’s stock price has plummeted by 52%, tumbling from NIS 3.70 ($1.05) a year ago to NIS 1.77 ($0.50) on Tuesday on the Tel Aviv Stock Exchange.

El Al, Israel’s flag carrier, has also been steadily losing market share at its main hub, Ben-Gurion Airport, partly due to deregulation and the “Open Skies” agreement, which opened up greater competition from European and international carriers. According to data from the Israel Airports Authority, El Al carried around 25.7% of all passengers at Ben-Gurion Airport during October 2017. The company will likely not achieve 30% market share this year – for the first time in recent history – jeopardizing the reduced fees it gets from the IAA.

“I am surprised to hear about his departure. I did not see it coming,” said Noam Pinko, an airline industry analyst with Psagot Investment House, adding that given El Al’s recent expansion plans – along with its recent large-scale acquisitions – the resignation was neither planned nor expected. It is unclear whether Maimon was forced out of the company or if he stepped down voluntarily.

During Maimon’s tenure, fuel prices rose, affecting the company’s finances. Another disadvantage facing the company is its relatively older aircraft fleet, part of the impetus behind its recent purchase of 16 Boeing 787 Dreamliners.

El Al is also in the middle of acquiring low-cost Israir from the IDB group, merging Israir with its Sun D’Or division and paying $24 million in cash, along with granting 25% of the shares to IDB.

Ongoing tense negotiations with the pilots union may have helped lead to Maimon’s departure, Hebrew media reported.

Maimon tendered his resignation to the company’s board of directors, which is headed by chairman of the board Eli Defes and deputy chairwoman Tami Moses Borovich. In the letter, Maimon touted the company’s record, including the launch of new flights to Europe and the United States. Its Tel Aviv-Miami route started last week.

“I would like to thank you for enabling me to achieve the vision and business plan I presented as CEO, which included the acquisition of new aircraft, expanding El Al’s network of connections, the launch of its Fly Card, expanding non-aviation activities (including land services) and an emphasis on streamlining.”

An El Al representative was unavailable for comment by press time. Since El Al’s inaugural flight from Geneva to Tel Aviv in September 1948, the airline has grown to serve more than 50 destinations around the world. The company has a market value of $875.5m.


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