Shutdown of El Al Averted

The threatened shutdown of EI AI was averted today when the flight officers agreed to new contract terms laid down by the airline’s management, including 20-40 percent cuts in their salaries. The decision, taken at a general assembly of the pilots’ union, which also represents flight engineers and navigators, was hailed by Finance Minister Yigal Hurwitz and EI AI’s managing director Avraham Shavit.

Shavit said it opened the way to successful negotiations with other categories of EI AI employes aimed at drastically reducing the carrier’s expenses. The pilots gave up the foreign currency linkage in their wage setup. Shavit said he anticipated similar sacrifices by other workers. Agreements are expected to be reached by Dec. 31 with flight attendants, ground crews, maintenance workers, technicians and clerical workers.

The pilots made their agreement contingent on a revision of work rules that would partly compensate for their loss of income. These include longer overtime and an improved retirement plan.

The air line appeared in imminent danger of closure over the weekend as the deadline for contract negotiations approached. The EI AI board of directors announced Sunday that it would halt operations unless the pilots agreed to its terms. That decision was firmly endorsed by Hurwitz and his “economic cabinet.” Hurwitz said Israeli taxpayers could no longer pay for the air line’s losses, estimated at $60 million this year.

EI AI pilots had been earning as much as $12,000 per month before taxes, part of it in foreign currency In addition, the company paid the income tax on the foreign currency portion. Under the new agreement, EI AI expects to save $10 million a year on the wages of cockpit crews alone. It also anticipates savings of $10 million on overseas operations and $30 million by reducing the salaries of the rest of its employes and instituting an early retirement plan. The company hopes to generate an additional $10 million next year by increased sales.