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TEL AVIV, July 8 (Reuters) - Israel's ministerial privatisation committee on
Monday approved a proposal to sell 100 percent of state-owned national
carrier El Al Israel Airlines [ELAL.UL], a government official said.
The privatisation committee is headed by Prime Minister Ariel Sharon, who
has given full support to privatising El Al, which has been talked about for
years without result.
The sale will be done in stages, with the first phase expected to be
completed within a year, Alex Goldengoren, director general of the
Government Companies Authority, told Reuters.
"The first stage will be selling up to 49 percent of the government's shares
in either the stock market or to a private entity," Goldengoren said, adding
a share offering could take place in Tel Aviv or abroad.
He said a decision on what course will be taken should come in a few months.
"Although the situation is not an easy one there is an opportunity," he
said. "At the beginning- to mid-2003 we will be able to move forward with
the first stage."
Government officials believe El Al is an attractive buy because of its
reputation as having the tightest security in the industry.
It has not been determined when or how the remaining 51 percent will be
sold.
Contentious issues that have long delayed the privatisation of the national
carrier -- such as its heavy security costs and a prohibition on flying on
the Jewish Sabbath -- will be dealt with only in the second stage, the
official said.
El Al cannot fly from sundown on Friday to sundown on Saturday, which
together with its steep security costs weighs heavily on its bottom line.
El Al lost $85.2 million in 2001, compared with a loss of $109.4 million in
2000 as the company slashed expenses.
Its revenues last year fell to $1.1 billion from $1.3 billion in 2000 amid a
recession and a Palestinian uprising that began in late 2000, badly damaging
incoming tourism.
The possibility of the government retaining a golden share in El Al will
also be tackled only in the second phase, the ministry official said.
According to Israel Radio, El Al employees are already threatening to oppose
the privatisation.
But the government has agreeed to set aside $80 million for an efficiency
and retirement programme.
©2002 Reuters Limited.
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