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El Al announced yesterday that it would be streamlining its workforce to cope with an era of climbing costs and shrinking business. In the first stage, the airline will fire 650 employees, 400 of them temporary workers, but the figure will eventually climb to 900.

El Al management claims the layoffs will save the company, which is owned by the Borovich family, $20 million annually. The layoffs are part of the demands listed by management in its negotiations with labor representatives. Labor representatives object to the cutbacks and demand that management first slash other costs.

According to the plan, management is differentiating between the demands of ground crew workers and those of the crews working in the air, in other words, the pilots.

Management is calling on ground-based workers who have company cars to participate in travel costs, at a rate of NIS 10 per trip, to and from their jobs. It is also demanding merging of shifts and cutting back on such positions as team managers in factories.

With regard to pilots, management is demanding they spend less time abroad, and stay at lower-class hotels.

During talks yesterday, workers' representatives, bolstered by their economic consultants, demanded a host of documents and reports, so that they could examine company expenses. The consultants asked management to show them, among other things, its contracts with outside partners. Their intention is to check whether management prefers outsourcing certain jobs so as to cut down on personnel within the company.

THe layoffs follow the airline's recent report of terrible financial results. It suffered losses of $15.1 million during the second quarter of 2006 (and a cumulative loss of $27.5 for the first half of the year), due to high oil prices and stiff competition in the air. The company has also issued a profit warning, saying that it would end 2006 in the red. El Al had registered a profit of $29.8 million for the second quarter of 2005.