El Al Airlines took delivery of its first Boeing 787 Dreamliner aircraft on Wednesday in a $1.25 billion investment aimed at renewing its long-range fleet, halting a drop in its market share and winning back business customers.
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In all, Israels flag carrier will receive 16 787-8 and 787-9 planes – both bought and leased – by 2020. It expects one more 787 by year-end, a total of seven by the end of 2018 and 14 by the end of 2019.
They will initially fly from Tel Aviv to Newark, starting October 17, and then to Hong Kong, London and New Yorks JFK airport.
At a ceremony on the tarmac at Ben-Gurion International Airport following the airplanes flight from Seattle, El Al CEO David Maimon said the fleet renewal was the start of a new era for El Al, helping it better compete in a fiercely competitive market.
El Al was once the go-to airline for most Israelis, thanks in part to the kind of stringent security that equips planes with missile defense systems.
But it has frustrated customers, particularly business travelers, over the past decade with an aging fleet that compares poorly with competitors offering newer jets fitted with the latest in hi-tech entertainment and comfort.
Last week, it reported a 53% drop in second-quarter net profit due to higher salary and jet fuel costs. Its market share at Ben-Gurion Airport fell to 29.5% from 34.2% a year ago.
I am sure [because of] this aircraft most of our passengers will be back, especially the business segment, Maimon told Reuters on Wednesday.
The average age of El Als 19-strong long-haul fleet of Boeing 767s, 747s and 777s is about 19 years, with 14 of them more than 21 years old. In recent years, El Al has renewed its short-haul fleet with 23 Boeing 737 aircraft.
We have old aircraft. But two years from now, we will have a new fleet – the average age will be about five, six years, Maimon said, noting the 747s and 767s will be retired. The new aircraft are expected to cut fuel costs by at least 20%.
El Al, which is expanding into North America with nonstop flights to Miami, starting in November, retains an all Boeing fleet. In a bidding round, it opted for the 787s over Airbus A350s. Toward the back of the new aircraft is the inscription Proudly all Boeing.
This relationship is almost 70 years old and we dont have a lot of all-Boeing customers anymore, said Boeing Vice Chairman Ray Conner. The relationship between our company, Israel and El Al is one of the more precious ones we have.
In an otherwise festive ceremony, which included Transportation Minster Yisrael Katz as well as a host of visiting dignitaries, there was also a restrained protest by El Al maintenance staff, protesting delays in talks over a new labor agreement with management.
Standing in rows by the hanger where the ceremony was taking place and dressed in black T-shirts, they stood by silently, except to sing the national anthem Hatikva at several points.
Reuters contributed to this report.