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The planned flotation of El Al passed through exceptional hardships to reach the stage where its shares will be offered to the public for the first time today. But even after the issue, the list of dilemmas relating to the national airline's status will remain long, creating the feeling that the Finance Ministry decided that any privatization at all would do - no matter what it entails.

Normally, privatization means that the state sells an asset, thereby transferring its management to private hands, and uses the proceeds of the sale for its own purposes. The state also usually relieves itself of any involvement in the company and grants it no guarantees. The El Al flotation, however, is a completely different ball game.

In order to get the issue off the ground, the state forgave the enormous $274 million loan it gave the airline to finance the purchase of its planes. Then, on Sunday, the head of the Government Companies Authority, Eyal Gabbai, announced that if El Al collapses, the state will buy the airline's planes from the creditor banks and set up a new company to operate its routes. In other words, a situation could arise in which the state will pay twice for its share in El Al's planes.

Proponents of privatization like to say that the purchase price received by the state is only a secondary goal of the process. But in El Al's case, the state is receiving no money at all for the sale. All the money raised by the offering will be used to pay compensation to the company's employees - because the airline's obligations to its workers exceed its market value. One reason for this is that El Al is being sold during a worldwide slump in the aviation industry, making it difficult to obtain a high price.

Thus from a fiscal perspective, the El Al flotation will not improve the national accounts; it will worsen them. It is, however, possible to argue that ending state ownership of the airline will spare the government future expenditures, and perhaps that is worth something.

But even if you ignore the fiscal aspect and define the transfer of the company to private ownership as the central goal of privatization, the results are problematic. The structure of the issue encourages El Al workers not to buy shares now, but only at the end of 2004 (when they will be able to purchase the stock at a larger discount).

Furthermore, it is possible that the potential buyers will be unable to reach an agreement with each other on the structure of the board of directors, meaning that the state will have to continue exercising its voting rights until a controlling interest is formed. Thus El Al is liable to remain a government company for at least another year and a half. During this period, the airline will not be able to fly on Saturdays and Jewish holidays, and in the absence of private owners, it will also have trouble streamlining.

El Al's flotation will thus not only not earn any money for the seller, it is also liable to return some of the company's assets (planes and routes) to state ownership - for additional payment - and will also not enable the new shareholders to affect its management. Such an arrangement cannot be called privatization.

Finance Minister Benjamin Netanyahu has registered two important achievements during his short tenure to date: enactment of the economic program and the passage of pension reform. If today's flotation succeeds, he will doubtless also try to boast of an achievement in the field of privatization. But given the conditions under which El Al is being offered, this is not yet privatization.