Despite the lack of any real progress in the past six weeks in the negotiations on a new labor contract at El Al Israel Airlines Ltd. (TASE: ELAL), which is a condition for First Israel Mezzanine Investors Fund (FIMI) to invest in the airline, it has agreed to give El Al another extension to try and reach a deal.
In a notice to the TASE today, using almost the same words as in the notice about the first extension, El Al said, "This morning FIMI notified the company of an extension of the period to complete the conditions for the deal by an additional 45 days from August 30, pursuant to the provisions of the investment agreement.
"In the notice, FIMI said that no progress had been seen in the negotiations on the new collective agreement between the company and its employees, the signing of which to the satisfaction of FIMI is one of the conditions for closing the investment agreement. FIMI added that in view of its assessment that there is little chance of realizing the deal under the investment agreement, FIMI reiterates its statement that, notwithstanding what is stated in the investment agreement, the company has the right to open, manage, and even close negotiations with any other investor prepared to invest in the company (in parallel or instead of FIMI)."
El Al and FIMI first announced FIMI's investment in El Al in January, and they signed the conditional agreement for an investment of up to $75 million in the airline in April. One of the conditions for the investment was the signing of a new labor contract by El Al, but neither its management nor its employees have felt any urgency to do so, and the talks have crawled in the past few weeks.
El Al has 5,800 employees, and talks between management and the various workers committees are over the streamlining measures needed to compete in the aviation market. Wide gaps still remain on almost all issues, from salaries to how to manage the airline.
Published by Globes [online], Israel business news - www.globes-online.com - on August 28, 2013
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