El Al averts worker strike

According to the terms of the collective agreement El Al will raise workers' salaries by some 1.5% annually.

By MATTHEW KRIEGER
July 18, 2007 06:58
2 minute read.
el al strike 88 298

el al strike 88 298. (photo credit: Ariel Jerozolimski)

El Al seems to have avoided a strike scheduled for Wednesday after making significant progress in negotiations to reach a compromise with its workers' union over pay raises and other conditions of its collective work agreement, set to expire at year's end. According to the terms of the collective agreement, which will be signed through 2010, El Al will raise workers' salaries by some 1.5 percent annually, with some airline employees taking early retirement after agreeing to higher compensation figures offered by the airline. In addition, the agreement will seemingly stipulate that the airline may offer more money to computer specialists and other engineers covered by the collective work agreement, and can hire an additional 40 workers. Talks regarding the agreement were continuing at press time. "While the additional expenses are not good for any company, especially one such as El Al, which is currently going through a rough period, if the agreement gives the company some peace and quiet for three years, it will be worth it," said Yisca Erez, an analyst at IBI Ltd. According to Erez, the new agreement will cost El Al some NIS 22 million a year, however, she said, it was crucial for the company to avoid the possibility of a strike during the busy holiday season, as threatened by the workers's union. "Resolving the potential strike was important; however, the most pressing issues facing El Al now are competition and fuel prices," said Erez. "In order to overcome these hurdles," she told The Jerusalem Post, "the company should try to close its non-profitable routes and make more of an attempt to fill its flights to capacity." The 2007 financial outlook for the airline, which posted a net loss of nearly $45m. last year and a net loss of some $42m. for the first quarter of 2007, will not be affected by the wage agreement, according to Erez who carries a "market underperform" rating on the shares. The company is expected to announce second quarter earnings next month. The prospects of an airline-wide strike rose last month after the Histadrut formally recognized workers' complaints against the airline, giving the union the legal go-ahead to begin the process of calling a strike. El Al's management, which was accused by the union of preparing to cancel its collective agreement, rejected the claims and the Histadrut's decision, releasing a statement to the Tel Aviv Stock Exchange earlier this month that it had no "intention of revoking the agreement with the workers at this stage, and therefore there is no reason to call a dispute." A strong majority of workers for the airline, among them ground crews, flight staffs and pilots, had voted in favor of the threatened strike. Meanwhile, the airline introduced its new marketing campaign to reporters in Tel Aviv on Tuesday. The campaign, which features new TV and Internet ads, coincides with the airline's acquisition of two new Boeing 777s at a cost of over NIS 1 billion. The airline, which earned a $64.1m. profit in 2005, has looked for cost-cutting opportunities as part of its efforts to reverse the more recent losses, and is presenting itself as a "premium" flying "experience" in the new campaign. But that may not be enough. "In order to start turning itself around," said Erez, "the company is going to need more than a marketing campaign and must actually start providing better service and schedules to accommodate its business class passengers. More customers are willing to pay more and are looking for this service, but now is the time for the company to prove itself." Nathan Burstein contributed to this report.


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