"El Al is going through a complicated process of bringing in a serious outside investor with a track record who believes in El Al's potential and wants to help turn it into a profitable, efficient, and competitive airline. I believe that this is the most significant and important step undergone by El Al since it was privatized," said El Al Israel Airlines Ltd. (TASE: ELAL) CEO Elyezer Shkedy in a letter to Israel Tourist and Travel Agents Association chairman Kobi Karni, following First Israel Mezzanine Investors Fund's (FIMI) investment in the airline. Shkedy was responding to Karni's demand that El Al rescind its decision to cut travel agents' commissions from 7% to 5% in July.
Shkedy continued, "We're in a battle for survival, and in such a battle, every measure has to be taken, however painful it may be, to deal with the difficulties and challenges facing us every day. The decision to reduce the base commission was made from necessity, and with the realization of the complex financial reality in which we operate. It is just one of the measures that El Al will take in the coming year to deal with the difficult financial situation in the global aviation industry in general and at El Al in particular."
Shkedy added that fuel prices, the global and Israeli economic conditions, and the security situation materially affected El Al and the incoming tourism industry, including travel agents, in the fourth quarter. He reiterated that the airline considers travel agents as its main sales arm, saying, "The decision to reduce, but not abolish, the commission was made out of the perspective of partnership and an appreciation of the importance of the important role and influence of travel agents on El Al's revenue."
Published by Globes [online], Israel business news - www.globes-online.com - on February 14, 2013
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