Chances are slim that local investment fund FIMI will follow through with its proposed deal to buy a 47% stake in El Al for $75 million, the Israeli airline announced Wednesday.
However, despite El Al's assessment, FIMI extended the deadline for carrying out the deal by another 45 days, after an initial extension in July.
The main reason the deal has become bogged down is El Al management's failure to reach a collective bargaining agreement with the company's employees.
FIMI conditioned its investment deal on a new labor agreement at the airline.
FIMI: Labor deal could turn airline around
Sources close to FIMI stated that if a new labor deal were signed in which all sides made concessions, the perennial loss-generating airline could be turned around into a profitable venture.
El Al management sources estimated that surplus manpower costs the company NIS 400 million per year.
Based on an agreement signed by FIMI and El Al in April, in the first stage of the investment deal the fund would invest $50 million for a 38% stake in the airline. This would have given the fund control of the airline along with Knafaim Holdings, its largest current shareholder.
The fund would also have received two stock option grants, each for $12.5 million, that if exercised would let it increase its stake in El Al to 47%.