El Al considers cancellation of routes
In coming month company to send some of its employees on extended vacation in order to cut costs
El Al management is considering cancelling some routes and lowering flight frequency on others. As well, the option of cancelling the commission that the company pays to travel agencies will be considered.
These issues will be brought up for decision this week in a special meeting of the El Al directorate following appraisals that the company will finish the year 2006 with losses.
In the first quarter of the year the company recorded a loss of USD 12.4 million. In the meantime, it has been decided that by the middle of next month, a portion of El Al employees will be sent on extended vacations in order to save costs. These will mainly include administrative employees who are not directly related to the handling of flights.
One of the routes El Al is considering cancelling is the Toronto-Tel Aviv route. Sources in the company say that flights to Toronto and connection flights from the city do not contribute to the company’s profitability. “It is preferable that El Al sign a cooperation agreement with Air Canada rather than send a relatively old plane to an unprofitable destination such as this one,” said a source in El Al.
'Security incidents have worsened situation'
An additional step being considered is the cancellation of the 7 percent commission on each ticket given to travel agents. “In most countries the agent commission has been cancelled. Each year, more and more people are purchasing tickets from the internet, making the commission increasingly irrelevant. The world of flight is changing and whoever doesn’t adapt will be left behind,” said a senior employee in the company.
Security incidents have worsened the situation El Al finds itself in due to increasing competition in the summer months. Some of the companies board of directors have stated that they will “demand clear answers” from the administration in the upcoming meeting.
An El Al spokesperson commented that an extended vacation of some of the employees is intended to cut costs. “This is done in many companies,” said the spokesperson. According to him, the company is continually discussing steps for streamlining and savings.
