The Histadrut (General Federation of Labor in Israel) is due to announce today a labor dispute at El Al Israel Airlines Ltd. (TASE: ELAL) because of the demand of CEO Haim Romano to cut employee benefits included in the airline's labor contract. The Histadrut is angry that Romano is making the exact same demands that he had earlier withdrawn when he signed the labor contract in November, and implies that he has acted in bad faith.
Romano wants to limit the unlimited 50% discount in fares given to the families of El Al employees. This bonus comes on top of the free tickets for the employees themselves. Romano wants to restrict the number of discount tickets to two per family member per year, and to one per year for an employee's parents.
El Al's workers committee admits that this is a distortion, but it is demanding three discount tickets per family member per year, including an employee's parents.
Romano also wants new employees, hired after August, to pay taxes on the fare benefit, which the workers committee strongly opposes.
Romano wants to eliminate employees' eligibility for car costs, since they use rides organized by the airline. He wants new employees to participate in the cost of meals, depending on their salaries.
El Al workers committee chairman Yossi Levy claims not to understand Romano. "Employees who receive car costs don’t need the ride, which they only use when their car has broken down or if they have to give it to their son or wife. The ride does not pay, because you have to get up an hour earlier in the morning because of the long roundabout route it takes."
Ostensibly, Romano's back is to the wall. Right at the peak travel season, the Histadrut is declaring a labor dispute, which means that employees can legally launch sanctions after 14 days. On the other hand, the employees also have few options in the face of Romano's alternative: cut the fat or the firing of temporary workers.
El Al's collective labor contract stipulates that the CEO cannot cut employee benefits without their consent. The contract has a caveat, however: the CEO has two options reduce the airline's activity, such as shutting down routes, or firing non-tenured employees, even employees who have been working at the airline for years. If the employees opt for the second option, they will be depicted as selling out the non-tenured employees merely in order to keep the tenured employees luxuries.
If the El Al workers committee and Histradrut chose the firing of employees in order to save benefits, it will not set a precedent. In the November contract, they already agreed to the firing of 30 tenured employees in exchange for Romano's foregoing his demand to cut benefits.
El Al's management is taking a wider perspective and argues that the workers committee is apparently living in a bubble. Management points to the layoffs at British Airways plc and Continental Airlines Inc. (NYSE:CAL).
For its part, the workers committee feels that Romano is the one living in a bubble. "He tells everyone that he has eliminated a VP position and cut his own salary by 20%, but since he took up his post, the number of VPs has actually risen from six to eleven," claims Levy. "I proposed to Romano that every VP earning more than NIS 100,000 a month such be satisfied with just NIS 100,000, but Romano rejected this."
Levy is determined to prove that El Al's management apparently does not know the adage, "Let's ask, let's do it". He relates the inefficiencies of El Al's management. "The last time air crew received uniforms, management saw two months later that the belt buckle didn’t have El Al's logo on. What did they do? They went and bought 2,500 new buckles, just so the logo would be there. After all, uniforms are replaced every two years; they couldn’t have waited a bit longer? Who looks at a the pilots' belts?
Published by Globes [online], Israel business news - www.globes-online.com - on July 28, 2009
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