El Al's Crisis

Israel's El Al, the airline that launched a thousand quips about my son the pilot, is flying low--in part because of its pampered pilots. A plethora of labor disputes, including jealousy in the ranks of many of the line's eight unions over the fact that a few jumbo-jet pilots earn as much as $11,000 a month, forced management to ground its planes for three weeks in April. The lockout cost the company $15 million, but its problems did not end there. Among the others: a labor force of 5,500 people that some critics claim is too large, and an aging fleet awaiting delivery of new and more economical jets. In consequence, government economists predict that El Al, which almost routinely rings up profits, could lose $27 million in 1978, the worst performance in its 30-year history.

The company, which gets 3% to 4% of its $400 million operating budget from the government, has asked for an additional $15 million subsidy. But Prime Minister Menachem Begin, committed to freer enterprise, so far has been no more forthcoming with El Al than he has been with Anwar Sadat. Says Gad Yaacobi, chairman of the Knesset Economic Committee: "The government will be very reluctant to give El Al this subsidy until it proves it will make every effort to become more efficient."

Some harsher critics in the Knesset would like to close down the company and start a new one, a move that would allow it to reorganize, terminate its labor contracts and prune the work force. Though such extreme action is unlikely, it remains "a possibility," says Managing Director Mordechai Hod, who was commander of the Israeli air force during the 1967 Six-Day War.

Hod says he would prefer to freeze pilots' salaries for a year, hammer out one basic contract with all eight fractious unions, get higher utilization out of the line's 16 planes and take advantage of newly expanded routes. The U.S. agreed two weeks ago to extend El Al's landing rights beyond New York City to four other cities. El Al will probably start flying to Los Angeles next April and later add Chicago, Miami and Boston. In November it intends to offer a no-frills, no-meals "holiday" class round trip between New York and Tel Aviv for $499, vs. the lowest current fare of $628. In July the line's only competitor on the route, TWA, began offering reduced fares, and it plans to match El Al.

El Al would get its best lift not from subsidies or new fares but from a far more basic development: peace in the Middle East. Officials speak wistfully of being able to do away with some costly security measures, carrying tourists to both Tel Aviv and Cairo, and expanding routes to rich new markets in Arab countries. qed

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