El Al considering Sat. flights

The state holding in El Al has fallen to 49.47%, making it a mixed ownership company.

As of this week, El Al (TASE: ELAL) is no longer a government-owned company; its ownership is now mixed. The company’s series A warrants issued in the privatization tender last year have been exercised.

El Al said that all the series A warrants had been exercised this week. The exercise price was NIS 1.30, while the El Al share is currently traded at NIS 2.79 on the Tel Aviv Stock Exchange, putting the warrants deep in the money, and ensuring that they would be exercised, except for mishaps and forgotten warrants, of which there were none.

The exercise of the warrants reduced the government stake in El Al to 49.47%, making El Al a mixed ownership company for the first time.

The greatest significance of the change in El Al’s ownership is that Section 4A of the Government Companies Law (1975) no longer applies to the company. This section, enacted in 1982, has hitherto barred El Al from flying on the Jewish Sabbath.

El Al recently began a thorough examination of Saturday flights. A number of teams have been set up to consider the various consequences of such flights. In addition to the possibility of a boycott by haredim (ultra-Orthodox Jews), El Al is considering other aspects of Saturday flights, such as higher operating costs incurred by additional working hours (wages for work on Saturday are double those for the rest of the week).

Among other things, El Al’s issue prospectus said that a number of economic studies of Saturday flights had been conducted over the years, all of which concluded that such flights would substantially boost the company’s profits.

Published by Globes [online] - www.globes.co.il - on June 9, 2004

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