Financial Spat Won't Torpedo Anti-missile Systems for El Al Jets

The state will pay if the carrier balks, PM orders: but tells ministers to wrest money from the airline

Everybody agrees that El Al (TASE: ELAL)  jets need anti-missile systems. The airline wants it and so does the government. The question is not cui bono, it's who pays.

The project had bogged down over NIS 20 million, over which the privatized airline has been arguing with the Finance and Transport ministries.

TheMarker has learned that after a discussion at the Prime Minister's Office, Ehud Olmert ordered Finance and Transport to pay first, then do what it took to get El Al to fulfill its obligations.

If no agreement can be reached with El Al within a month, the state will foot the advance payment, so the systems installation can proceed. Later Finance and Transport will do what they can to get El Al to pay its part.

El Al used to belong to the state. Since 2004 it has belonged to the Borovich family.

"Don't fold to El Al's demands too fast," Olmert said at the meeting. "You have to hold a quick negotiation with them. I know that a lot of people choose to fly El Al because of its reputation for security situation. People know it's safer to fly El Al."

Also at the meeting were representatives of the Shin Bet and of other security services.

The Finance and Transport ministries claim that El Al had undertaken to share the costs, under its privatization agreement. El Al for its part demands various undertakings by the state, and claims it doesn't have the means to pay for the project.

Among other things El Al demands that the state compensate it for the added weight the systems would put on its places. That in turn will force it to reduce the passenger load on each flight and lose income, El Al claims. There is also the cost of dismantling the system when El Al sells its jets in the future, it adds.