El Al’s share price fell 4.7 percent following news that a badly-needed investment fell through, and the airline’s future was considered to be in jeopardy, according to media reports on Thursday.
FIMI, which had planned to put $75 million in El Al, cancelled the deal after management-labor negotiations failed to yield a contract, which was a condition for the deal. It would have given FIMI 47 percent ownership.
The airline has been beset by financial troubles for some years, posting losses of tens of millions of dollars annually. It hasn’t turned a profit since 2010.
Analysts said that unless El Al moves quickly to either raise money or cut costs, the airline could be in serious trouble, Arutz Sheva reported.
El Al was privatized in 2003, and around half the company’s shares are in the public’s hands, with the balance owned by a private investor group, the government, and the Histadrut labor union.
The airline desperately needs an infusion of cash to modernize its fleet. Otherwise, it will be unable to compete with European carriers who will be offering discount fares, a result of the “Open Skies” agreement Israel signed with the European Union earlier this year.
The government has tried to help by agreeing to cover nearly all the airline’s security costs, but the airline continued to lose money in 2013. Analysts say that workforce reductions are imperative if El Al is to remain viable.
The airline has about 6,000 employees and 40 planes, one of the highest employee-to-passenger ratio of any airline in the world.
El Al has not yet commented on the development.