Financial Spat Won't Torpedo Antimissile Systems for El Al Jets

A spat over NIS 20 million between the Finance and Transportation Ministries, on the one side, and El Al, on the other, has been bogging down a project to install antimissile systems to protect the airline's jets from shoulder-launched missiles.

But after a discussion at the Prime Minister's Office, TheMarker learned yesterday, Prime Minister Ehud Olmert ordered the ministries to pay first. Only afterwards will they be free to do what it takes to get El Al to fulfill its obligations, Olmert told them.

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

The state has thus far invested NIS 46 million in the system, which has so far only been installed on one El Al plane. Another five jet airliners are in line to be equipped as well.

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

The meeting was also attended by representatives of the Shin Bet and the other security services.

The Finance and Transportation Ministries claim that El Al undertook to share the costs under its privatization agreement. But El Al is demanding various commitments from the state in return, and claims that it does not have the means to pay for the project.

Among other things, El Al wants the state compensate it for the added weight the systems would put on its planes, as it claims that this would force it to reduce the passenger load on each flight and lose income.

Moreover, it said, there is the cost of dismantling the system when El Al sells its jets in the future.

El Al used to belong to the state, but since 2004, it has belonged to the Borovich family.