Eliezer Shkedy said Sunday that after four years he would be stepping down as CEO of El Al Airlines, as Israel’s flagship carrier readies for a new era of heightened competition.
- El Al Says New Investors on Horizon
- El Al Profit Soars
- El Al Launching Lo-cost Service
- Israel, EU to Widen Open Skies Pact
El Al quoted Shkedy as saying he felt “pride and tremendous satisfaction” about his role at the airline but regretted failing to reach a new collective labor agreement with unions, which is considered a key element in the company’s ability to compete. “El Al must reduce spending for the sake of a better future for its personnel and passengers if it wishes to continue to grow and compete in the field of aviation, which is variable and challenging,” Shkedy said in the statement.
A former Air Force commander, Shkedy has been saying privately that he is leaving the company simply because he has reached his limit there. Some have speculated that he has been appointed to a post in the public sector, but this has not been confirmed.
Shkedy will stay on for another two months until a successor has been named and an orderly transition has taken place, El Al said in a statement to the Tel Aviv Stock Exchange, adding that his resignation was not due to issues that could be relevant to stockholders.
Shkedy has promised he will remain an active CEO in his remaining months. Shares of El Al closed without change on Sunday at 55 agorot.
Under his watch EL AL earned about $40 million, reversing $140 million in accumulated losses in the year before. El Al reported that its third-quarter profits rose 54% from a year ago to $58 million, while revenues climbed 6% to $643 million and passenger loads increased 5%. But the airline faces increased competition as the so-called “Open Skies” agreement with the European Union goes into effect, loosening restrictions on the number of carriers and flights between Israel and EU destinations.
Shkedy had led the fight to block or at least modify the terms of Open Skies, contending that the reforms created an uneven playing field that would work against El Al and Israel’s other two airlines, Israir and Arkia. While the agreement was signed with the EU earlier this year, Shkedy was able to win extra aid from the government to cover Israeli carriers’ higher security costs.
Last week, El Al unveiled plans to create a low-cost airline called UP to serve five European destinations. The airline is taking deliveries on eight Boeing 737-900 ER jets to service medium- and long-haul routes at a cost of $420 million.
El Al suffered another setback with the decision about six weeks ago by the private equity investor FIMI not to take a 47% stake in the company for $74 million. FIMI pulled out of the agreement after the airline failed to reach an agreement with unions, as the fund required before it would go ahead with the deal. El Al has since renewed talks with unions in the past week.
Shkedy came under public criticism for the size of his compensation as El Al CEO. In 2010 the cost of his contract to the company reached NIS 16.7 million, including bonuses and stock compensation, although it fell in subsequent years to NIS 2.85 million in 2011 and NIS 2 million last year. In response, he contributed NIS 7.7 million for a fund rewarding top-performing employees.