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If somebody had told you a year ago that the national airline would be privatized via the stock exchange, that it would start making profits, that its shares would shoot up 300 percent, and that the group buying its shares would try to borrow a quarter-billion shekels backed by its investment in its shares - you'd have laughed.

But the institutionals' analysts aren't laughing, they're sick. The night before El Al hit the Tel Aviv Stock Exchange, one of them told us, "It would take a miracle to persuade us to invest. It is a bad company, and if the state wants to solve El Al's problems by floating it on the stock market, we aren't the address."

Ilan Sasson, a veteran portfolio and mutuals manager at Moritz Tuchler, told us he wouldn't touch the El Al IPO with a barge pole, because of the lousy situation of aviation in general, and the Israeli airline's horrible financials since the September 11, 2001 terror attacks on the U.S., in particular.

"El Al can't make money now and I don't know when it will, so I'm not buying this investment," Sasson said. Kobbi Finkelstein, an analyst at Investec, also advised his customers to stay away. Ofer Livni, an analyst at Ilanot Batucha, predicted the company would lose $43 million in 2003.

Nochi Dankner isn't laughing either. The night before El Al's issue, he planned to buy shares in the company together with the Borovich family. At the last moment, the Boroviches stood him up, and bought the shares by themselves. Dankner fumed, but comforted himself with the thought that the inherent risk was tremendous.

A year later, looking at the chart of the airline's flight on the Tel Aviv Stock Exchange, he surely must feel sour.

Lev Leviev, Yitzhak Tshuva, Zadik Bino - in fact, all the big players - aren't slapping their thighs with glee either. They and anybody else could have bought El Al shares at the IPO at a company valuation of $105 million. For a mere $15 million somebody could have bought control over the company. But nobody thought affairs at the stuttering airline would turn around so fast.

If the state had sold the controlling interest outright instead of floating El Al on the stock exchange, an outcry would have been heard about how the state gave the Boroviches control over the company for a bowl of lentils.

The diaper guy

El Al was floated on the stock market in an open auction, yet nobody stood in line to bid. If the Boroviches hadn't decided to gamble on the company, the IPO would have been undersubscribed.

When Amos Shapira left Hogla-Kimberley two years ago to take the CEO's seat at El Al, eyebrows rose sky-high throughout aviation circles. "The diaper guy," sneered top airline officers. To this day they say the man who sold Huggies doesn't understand aviation. But the company's financial statements tell another story. They reveal that El Al netted $6.4 million, thanks to sharp cost-cutting that the diaper guy, together with chairman Michael Levy, enforced in the last two years.

Naturally, it is too soon to get excited. El Al has tremendous debts. The financial statements of airlines are enormously complex and few analysts know how much its planes are really worth, or what the probability is that El Al can service its debt.

Moreover, the brothers Izzy and Dedi Borovich are experts at manipulating the stock market and the press. The positive sentiment surrounding the airline suits them to a T, because they're preparing to raise a massive amount of money via the capital market and banks to take over the airline.

It's pure business

That said, one thing's sure: El Al is taking off. It is no longer a government monopoly operated only to make a living for its workers, to provide jobs for cronies and to fly politicians in first class. From this point onward, El Al's management gets measured only by business criteria - net profit, cash flow and debt service.

The company's workers, the travel agents, the company's bankers and suppliers may think the pressure Shapira imposed in the last two years was great, but they ain't seen nothing yet. The moment before or after the Boroviches exercise their options and take the reins at the company, the pressure is going to double or triple, in order to pretty up the company's balance sheet and start creating cash.

In the last year, Levy and Shapira managed to upgrade El Al to business class, but that's only in points. Now the Boroviches have to prove they can upgrade the airline to first class, in genuine terms of real cold cash, and not temporarily either. They won't be stopping there, either, but will be bringing in a European carrier as a partner.

Naturally El Al's workers, agents and passengers have been accustomed to flying coach for the last 20 years, and can't quite grasp that they have a stab at first class. And they're right. The trip will be a long one, and it's a cruel industry that for better and worse, has surprised bigger and better players than the Boroviches before.