El Al Israel Airlines Ltd. (TASE: ELAL) CEO Gonen Usishkin has sent a letter to the company's employees today in which he states, "The threshold condition for obtaining a bank loan with a state guarantee is the signing of a labor agreement. Without a loan, El Al will not be able to stay in existence."
Usishkin's letter follows the dramatic events yesterday in which representatives of the El Al workers committee burst into a meeting of the airline's pilots and management and representatives of the Histadrut (General Federation of Labor in Israel). The meeting was called to discuss the cut to the pilots' pay, which is expected to be about 40% (partly because of the expected low level of aviation activity in the next few years). The invading workers rioted, throwing chairs and breaking furniture, according to those present. The Histadrut responded by announcing the suspension of the workers committee.
In a video clip on YouTube, Avi Edri, chairman of the Transport Workers Union in the Histadrut, said, "The pilots' committee that everyone is trying to incite against is supposed to give $110 million of the pilots' compensation as a contribution to annual cost savings. Almost 50% of the cost savings that the company is meant to undertake is coming from the pilots. El Al's workers, led by the head of the workers' committee, simply broke up the meeting, behaved violently, broke tables, and simply caused chaos in the room. The union cannot overlook the incident. In the light of behavior that cannot lead anywhere we have decided to disband the committee, to take matters into our hands, and to conduct negotiations with workers' representatives who show responsibility."
All sides are aware that without a signed agreement with the workers the management will not be able to obtain a loan. Will yesterday's violence actually assist in that, and enable the management to obtain the workers' blessing with a change in their representatives? Besides demanding streamlining, the Ministry of Finance is not prepared to grant a loan to a company in which management-worker relations are bad and unstable. El Al is at the same time talking to the banks, and gaining cash flow thanks to the cargo flights it is currently operating.
On the behavior of the workers' committee representative, Usishkin writes, "We understand that these are difficult, painful times, but we will not allow violence. El Al's people are under great pressure because of the complicated situation in which the company finds itself."
Referring to things that the workers' committee representatives said to the media earlier, in which they claimed that half the pilots had been secretly brought back from unpaid leave, Usishkin writes, "Contrary to the reports that have been spread abroad, the number of pilots active during the coronavirus crisis is much lower than 50%. It ranges between 20% and 40%, in accordance with the level of activity and the need to operate all the flights." Usishkin goes on to say that El Al management is in talks on bringing more employees back from unpaid leave. El Al recently stated that the workers on unpaid leave, about 90% of its total workforce, would remain so until the end of June.
"Together with all members of management, I am working with determination to reach a rapid conclusion to the process of obtaining a loan and signing a labor agreement," Usishkin concludes.
Published by Globes, Israel business news - en.globes.co.il - on May 26, 2020
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