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The El Al unions have proposed buying the national airline in exchange for waiving some of the company's commitments to its workers.

In a meeting with the carrier's underwriters, the workers claim those commitments amount to $200 million - including accrued sick leave and vacation time. This is greater than the company value estimated for the airline's initial public offering, $100-150 million.

The state is only interested in selling the workers a 15 percent stake with preferential terms. The workers were told they would have to buy anything above that on the market. They were also told it was impossible to waive severance pay in exchange for shares.

The unions will meet at Ben Gurion International Airport today to discuss the disputed issues.

Before meeting the underwriters, union representatives met yesterday morning with Prime Minister's Office director-general Avigdor Yitzhaki and Government Companies Authority director-general Eyal Gabbai to discuss the proposed worker buyout.

The unions are concerned that the public offering will allow entities with interests not synergetic with those of the workers to take over the airline. Yitzhaki sent the labor representatives to raise the proposal with the underwriters.

In the meeting with the underwriters, the idea of the workers buying more than the accepted norm of 10 percent at discount was discussed. The workers would like to purchase at least 25.1 percent, in order to guarantee a slot on the board of directors, but a total worker takeover was also discussed.

The workers proposed that the controlling shares be granted in exchange for financial concessions. They argue the total accrued vacation and sick leave outweighs the value of the airline.

The labor representatives expressed willingness to create a "blackout" between post-privatization operations and the employee-owners. This model would mean the employees would not intervene in the day-to-day operation of the privatized airline. The company operates similarly today with the state, which owns the carrier, not involved in current management work.

The meeting ended without practical agreements but discussions will continue through tomorrow, when the ministerial committee on privatization is scheduled to approve agreements with the employees prior to the publishing of the airline's issue prospectus.

The unions have agreed the company will inject $108 million into the severance fund, as Transportation Minister Avigdor Lieberman reported in last week's Knesset Finance Committee meeting. There is also agreement on a voluntary early retirement program for 50 employees every year for the next three years.

The unions sought to anchor labor agreements for 10 years. They have agreed to the framework of wage cuts on which the Histadrut labor federation and Finance Ministry have agreed.

The unions also agreed to a method created at the end of last week by the Transportation Ministry and the airline's management for the transfer of El Al routes to other Israeli airlines after privatization. The mechanism sets a minimum passenger quota that El Al is committed to fly on a route. If El Al does not meet the quotas, another Israeli airline will be brought onto the route. In extreme cases, the rival will get the entire route and El Al will stop flying it.