After a decline in its share price of 5% in the past week and 10% in the past month, El Al Israel Airlines Ltd. (TASE: ELAL) is attempting to reassure its shareholders. The company has reported to the Tel Aviv Stock Exchange that the disruptions and cancellations of its flights in recent weeks arising from work sanctions by pilots will not harm its financial results and are of immaterial significance financially.
"In the light of the very extensive media coverage recently of disruptions to scheduled flights, El Al sees fit to report that, for about a year, El Al pilots, led by the pilots' representative body in the workers' representative organization, have been acting in a way that represents illegal work sanctions through, among other things, unwillingness to man flights, conditioning agreement to man a flight on a demand to split the flight (i.e. to pilot in one direction only), frequently reporting sick, and so on.
"Because of this, El Al has been forced to delay take-offs, to cancel flights, or to transfer flights to be operated by leased aircraft of other airlines. In the past few days, El Al has manned flights with pilots strictly in accordance with the provisions of the collective agreement and has refused to accede to demands by the pilots that are not provided for in the agreement, and therefore more flight cancellations have been caused.
"The consequences of the disruptions - beyond the harm to El Al's reputation - are higher operating expenses, mainly because of leasing of aircraft, increased wage expenses, and various costs arising from flight cancellations, as well as a decline in revenue from tickets," the airline informed the Tel Aviv Stock Exchange. All this, as mentioned, is on a scale that, according to the company, is not material to it so far.
El Al says that it continues to work towards restoring its operations to normal and that it aspires to good labor relations with all its employees.
Published by Globes [online], Israel business news - www.globes-online.com - on November 21, 2016
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