El Al Israel Airlines Ltd. (ELAL) fell the most in more than four months as some flights leaving Ben-Gurion International Airport were canceled as workers went on strike to protest an agreement that would increase competition.
El Al shares sank 8.5 percent, the most since Dec. 17, to 0.531 shekel at the close in Tel Aviv. The shares have lost 13 percent since the Histadrut labor federation said on April 18 it would strike until a proposed “Open Skies” agreement is modified. The benchmark TA-25 Index fell less than 0.1 percent.
The strike began at 5 a.m. today, disrupting outgoing flights of El Al and two smaller local carriers, Israir Airlines & Tourism Ltd. and Arkia Israeli Airlines Ltd. The Israeli Cabinet today approved the accord with the European Union, designed to increase competition and lower fares by allowing carriers on both sides to fly to more destinations.
“It’s a rarity but in this case, the interests of El Al’s management and its employees are aligned in preventing this agreement from going forward,” Adar Etzioni, head of research at Migdal Capital Markets Ltd. in Tel Aviv, said today by phone. “The Open Skies accord would threaten El Al by boosting competition and it would force the company to lay off workers.”
Ofer Eini, head of Israel’s national Histadrut labor federation, urged the government to delay a vote on the agreement in today’s Cabinet meeting and begin negotiations to protect workers’ rights. Approving the agreement “could lead to the collapse of the Israeli airlines,” Eini said in an e-mailed statement yesterday.
The agreement will “lower the prices of flights to and from Israel and increase incoming tourism,” Prime Minister Benjamin Netanyahu said in an e-mailed statement following the cabinet meeting.
El Al said the implementation of the agreement in its current form is expected to adversely affect all Israeli airlines, according to a statement filed to the Tel-Aviv Stock Exchange today after the market closed.
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