Forget about refinancing or returning the aircraft. Plans to open new routes to Tokyo or Chicago can be shelved. But cut almost a third of the company’s personnel? Well, that is like dropping a nuclear bomb on the unions.
By MARK FELDMANEl Al plane(photo credit: ERIC GAILLARD/REUTERS)
Save El Al, they say. Save El Al, the editorial pages trumpet. Save El Al, the CEO of the airline beseeches. Really, “save El Al” is taken as a fact, something that is so desirable, so vital to our national survival? “Save El Al” sounds like a lofty goal, and with its history should strongly be considered.If you contemplate why four months have passed since the onset of corona and nothing has been signed, do not be alarmed.Hours, long, tedious hours, have been invested going over El Al’s books, looking at its routes, deciphering the archaic agreements that the unions have managed to squeeze from management.The Finance Ministry calls it streamlining. The ministry has made it clear that if the Israeli government is going to back up the loans so El Al can be saved, draconian measures must be taken.Forget about refinancing or returning the aircraft. Plans to open new routes to Tokyo or Chicago can be shelved. But cut almost a third of the company’s personnel? Well, that is like dropping a nuclear bomb on the unions.The pilots opening salvo was give us 25% of the airline and we will negotiate. When management intelligently did not bother replying to their asinine request, pilots started calling in sick.Keep in mind that El Al has canceled most of its passenger flights this month, like the three previous months. It will soon announce that it is canceling July flights as well!Cargo flights are still flying and bringing in some revenue to El Al, as well as providing income to El Al flight crews. Of course, the Airports Authority wants its cut, and when El Al can’t pay it, the authority freezes the plane.“Save El Al,” you say. Perhaps “Liberate El Al” should be the motto.El Al CEO Gonen Usishkin has fumed at the government’s intransigence, stating unequivocally that the demands were impossible to implement, and that their aim is to ensure the carrier goes into liquidation.
He begged Prime Minister Benjamin Netanyahu, “As prime minister you carry the highest responsibility if, after 72 years, El Al ends its journey on your watch. Therefore, we ask that you don’t take a decision without giving us the chance of presenting to you the outcome of the Finance Ministry’s new demands.”His assertion is simple: “The significance of a decision to liquidate El Al is the loss of the State of Israel’s independent airline. Israel would become a besieged island subject to extortion from foreign airlines or foreign countries, whose interests are different from the State of Israel.”What utter poppycock.Usishkin also mentioned that liquidation would make it difficult to refund the more than NIS 1 billion that El Al owes customers for canceled flights. He also insisted that El Al has reached its current situation through no fault of its own and is being unfairly blamed for its troubles by ministry officials. He also reminded Netanyahu that it was Israel that decided to close its skies.Those assertions meet with no disagreement, though when he says that 30,000 Israeli households would be affected, he may be bordering on hyperbole.I HAVE worked with El Al my entire career. I have seen its lows and its highs. I have seen the commitment of many El Al employees going above and beyond to satisfy their clients. I steadfastly assert that El Al pilots are second to none, and will state unambiguously that El Al is the safest and most secure airline there is.The staff members at the Israeli branch of El Al achieve every objective I set for them. It is their bosses that I take umbrage with; it’s those bloated, I-have-seniority-so-no-need-to-work-hard employees that I take offense at. With their tenure guaranteed, their inability to think outside of the box or think at all is what irks me.My colleagues in the industry are too anxious to call them out. “We need them to pay our commissions; we need them to refund us so our clients can be repaid,” is what I am told. “Don’t rock the boat; mediocrity is not a mortal sin.”What cretins. Its 2020, and operating an airline today is completely different from even 10 years ago, to say nothing of the thousands of employees at El Al who started working there last century.SO, LET’S explore some of the myths in the Save El Al campaign:“El Al is our national carrier.”That is what El Al states on its site: “El Al, the national carrier of Israel, attaches great importance to activities that benefit the community.... El Al: Established in 1948 as the National Airline of Israel, we have grown into a prestigious international carrier.”Not true.In January 2005 control of El Al moved to private hands, as Knafaim-Arkia Holdings took possession of about 40% of the stock capital. A decision by the stockholders led to far-reaching changes in the directorate. Yes, the government subsequently accepted responsibility for El Al’s, Israir’s and Arkia’s security costs, accepting the fact that all three of Israel’s airlines share Israeli ownership and are viewed as Israeli airlines.In fact, at a recent Knesset committee debating once more whether El Al should have loans guaranteed by the state, a clerk with the finance minister stated the government had no desire to head back to state ownership.So put away your tissues, El Al is not today Israel’s national carrier. It is indeed symbolic of the State of Israel, and its history of bringing in new immigrants and stranded passengers is owed a great amount of gratitude.“EL Al is the airline for new immigrants.”Just two years after the creation of the State of Israel, El Al flew more than 160,000 immigrants from Yemen, Iran and India to Israel, as part of Operation Magic Carpet and Operation Ezra and Nehemia. During the Yom Kippur War in 1973, El Al maintained the only air link between Israel and the rest of the world. El Al also participated in the efforts to airlift military equipment. Another emotional moment in El Al’s long history was recorded on May 24, 1991, when a Boeing 747 carried a record number of people – 1,087 Jews – from Ethiopia to Israel. This should never be forgotten, and El Al deserves full kudos in its role.When El Al management two years ago decided to sever its ties with the Jewish Agency, though new immigrants still came to Israel, both Arkia and Israir stepped into the vacuum and brought to Israel planeloads of new immigrants, from the United States, South Africa, France and Great Britain. It took El Al only six months to realize that there are other Israeli carriers able to carry the load, and it soon made peace with the agency.In fact El Al’s decision to temporarily get out of the new immigrant business was made from a cost-benefit analysis. So while the public relations optics were great, the actual economic benefit was nonexistent. It was only when the agency cut off El Al from all of its travel needs, including the 1,700 Israelis sent in non-corona years to Jewish summer camps, was El Al management forced to capitulate.When then-president Shimon Peres made his state visit to Canada and the United States in 2012, his entourage flew Air Canada to Toronto and United Airlines from Newark. The reason was El Al’s insistence on a $4,700 oxygen tank deemed by its medical personnel indispensable for the 88-year-old president. Suffice it to say Air Canada and United Airlines trust the president’s staff, and the fantastic publicity they received when the president of Israel disembarked from the Air Canada plane cannot be calculated.THE COVID-19 pandemic has devastated the global civil aviation sector. Even strong airlines with excellent balance sheets have been forced to get government assistance, with some governments taking actual ownership. El Al is no different. The airline cannot survive without an immediate line of credit guaranteed by the government. Cutting routes, returning planes and refinancing present and future debts are not enough.The biggest obstacle, though, is neither planes nor routes nor banks nor loans – it’s people, people employed by El Al who must be terminated. Those people do not want to go; in fact, they refuse to go.As far as El Al management is concerned, there are many who are not opposed to the airline entering liquidation and being given the opportunity to start. But that route always circle back to the same issue. What compensation will those fired workers receive? One hundred percent compensation will not cut it, and El Al has neither the wherewithal nor the cash reserves to sweeten the pot.So, to save El Al the government has to step up, and not only with guaranteeing loans but with offering additional compensation to entice workers to depart their cushy jobs. To set such a precedent may be too high a cost to pay. If the government offers El Al workers more compensation, why not electric workers? And if that is the government policy, then it hurts me to say this but we cannot save El Al.We will need to start over, create an airline based on technology of today, with workers who have clear, well-defined roles; with pilots who realize how fortunate they are to have been trained by the Israel Air Force and now able to fly civilian aircraft.It would mean negotiating new, profitable routes. It would mean utilizing technology to make the company profitable.In the past few years, many airlines have managed the feat. They learned how to make money, real money, and keep their customers satisfied. Several of them also had one card up their sleeves. They went through bankruptcy, negotiated with staff and creditors, and came back leaner, hungrier and smarter. Others, like Southwest, made their quarterly profits by keeping their fixed costs down, and shared their profits with the staff.If you want a flagship carrier, one that brings pride to this country, repatriates stranded citizens and is able fly even during a pandemic, then throw out everything you thought you knew about running an airline and start from scratch. Learn from the others. Utilize the inherent strengths that we have.To all my El Al colleagues: If you’re not part of the solution, you’re part of the problem.The writer is the CEO of Ziontours, Jerusalem. For questions and comments email him at mark.feldman@ziontours.co.il
