El Al Forgoes Options to Buy Up to 10 Boeing 787 Airliners

Shareholders in the Knafaim group decided yesterday to cancel El Al's options on purchasing seven to ten Boeing 787 airplanes worth NIS 1 billion.

The move has far-reaching consequences. The carrier will get back the deposit it put down for the planned planes but will now have to wait until 2014-2015 should it decide it does want to acquire this model down the road.

El Al sources told TheMarker the decision is related to El Al's new standing as a private company rather than a government company and has nothing to do with the carrier's consideration of purchasing planes from Boeing's European competitor, Airbus.

The company's controlling shareholders are keeping tabs on the conduct of El Al workers, who do not seem to have internalized the transition from government to private company, say the sources. They are also concerned about the government's handling of the open skies issue. Shareholders do not want to risk the carrier's economic stability in the coming years, according to the sources, especially given the general uncertainty in the industry.

The sources claim the cancellation does not affect El Al CEO Haim Romano's strategic plan, known as El Al 2010. According to the plan, the carrier will add two new Boeing 777s, among other planes.