El Al has once again decided to maintain an all-Boeing fleet after it agreed to buy two Boeing 777-200 ER airplanes from the Seattle-based aircraft manufacturer for $246 million.
The company announced the deal on Sunday for the two aircraft, which will each cost $117m. to $123m. depending on the specifications required by the company. They are scheduled to be delivered in 2007.
El Al said that it had the resources to finance 15 percent of the purchase price, while the remainder would be covered through loans, for which it expects to secure commitments by December.
The planes will be used on the airline's flights to the US and Asia.
El Al announced its intention to purchase two new aircraft two weeks ago as part of its five-year plan "El Al 2010," and said that it was considering the Boeing planes, as well as an offer from Airbus for its A340. While El Al said at the time that it would close a deal, with either of the two, before the end of the year, few expected it to be completed so soon.
Industry sources said that while it was generally expected that El Al would go with Boeing, the feeling is that Airbus would be shocked at the news.
Having lost El Al deals in the past due to heavy US pressure which extended to the highest political levels on the government-owned company, Airbus had stepped up efforts to sell to the now privatized El Al for the first time after the airline was taken over by Knafaim Arkia Holdings Ltd. last December.
Sources said that the long-standing relationship between El Al and Boeing may have made it "virtually impossible" for the airline to make the change as there were further considerations involved, such as maintenance and repair facilities for the new aircraft.
Shares of El Al fell 1.31%, to close at NIS 3.62 in Tel Aviv following the deal.
Meanwhile, CEO Haim Romano said in an interview that the airline has plans to purchase further aircraft in the next five to 10 years.
As part of this investment, and in addition to the fleet expansion, El Al plans to spend $25m. to $35m. on its service, plus $1.5m. on a 200 position call center that will be open 24 hours a day. In addition, the airline intends to invest $20m. to $25m. on its information systems and $10m. to $15m. on maintenance and engineering, including upgrading its aircraft.
The Boeing 777-200ER is the most popular member of the 777 family of aircraft with more than 350 deliveries to date. The plane has a seating capacity of 301 passengers in a three-class configuration and a flight range of 14,316 kilometer.
El Al currently has four in its fleet.