El Al Says Fimi to Invest as Much as $75 Million for Stake
El Al Israel Airlines Ltd. (ELAL) headed for the highest level in 15 months as the company signed an agreement with Fimi Opportunity Funds for an investment of as much as $75 million for a stake in the country’s flagship carrier.
Shares advanced 5 percent to 0.615 shekel, set for the highest close since Jan. 26, 2012, at 4:12 p.m. in Israel in 6.3 times the three-month average daily volume. El Al said Fimi would get as much as a 47 percent stake, investing an initial $35 million for shares priced at 0.625 shekel a share. The deal is subject to the renegotiation of the carrier’s employee contracts, the company said in a filing to the Tel-Aviv Stock Exchange. Part of the stake will be bought from the largest shareholder Knafaim Holdings Ltd. (KNFM)
El Al stock sank to a record low in 2012 as Brent oil prices advanced for a fourth year. The company faces increased competition from scheduled and charter carriers, according to the company’s 2012 annual report.
Israel is in talks with the European Union over the signing of a so-called Open Skies Agreement that will allow carriers to fly to more destinations. El Al said in July this agreement may negatively affect the company. Global air passenger traffic last year grew 5.3 percent, less than 2011’s 5.9 percent figure, the International Air Transport Association said Jan. 31.
The airline is struggling to boost profitability, posting losses in four of the last five years. In February, El Al said it would cut 200 temporary jobs as part of planned cost reductions, the company said.
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