A senior El Al delegation signed today an agreement in France for the purchase of two Boeing ER-200-767 from Air France, for $82 million. Signing the deal on behalf of El Al were vice president for finance Yoram Galon and vice president for maintenance and engineering Arieh Freuchter.
A senior El Al source said that the decision to purchase the airplanes instead of leasing them from Air France through Arkia, saved the company $4 million. Arkia had previously said that the deal amounted to $86 million, and notified shareholders accordingly.
The purchased airplanes were manufactured in 1990. Since 1992 they have been in service at Balkan Airlines, Bulgaria’s national airline. The planes will be delivered to El Al in January and March 1999, and will join four Boeing-767s already in the company’s use.
The new airplanes are capable of particularly long flights without stopovers, and they will be integrated in direct flights to Canada, Chicago and Hong Kong. El Al will invest millions of dollars in interior design changes and take-off improvement of each airplane, bringing the total value of the deal to $100 million.
Arkia is demanding compensation from El Al for not honoring the agreement it signed. It was El Al that first approached Arkia for assistance in leasing the aircraft. El Al says that Arkia had a relative advantage in the case of leasing, but once the option of purchasing arose, El Al came to the conclusion that there it had an advantage of its own in implementing the deal without the involvement of Arkia.
Published by Israel's Business Arena August 17, 1998