El Al Israel Airlines Ltd. headed for the highest close in two months after the country’s flagship carrier said it would cut 200 temporary jobs as it seeks to return to profit.
The shares of the Lod, Israel-based carrier advanced 3.8 percent to 0.569 shekel at 2:32 p.m. in Tel Aviv, poised for the strongest close since Dec. 13. The advance brought the company’s market value to 282 million shekels ($76 million). Israel’s benchmark index, the TA-25, advanced 0.4 percent.
El Al shares sank to a record low in 2012 as Brent oil prices advanced for a fourth year. The company has also been hurt by intensifying competition, with European discount carriers expanding in the local market. The airline is struggling to boost profitability, posting losses in three of the last four years. It said in January it’s in talks with Fimi Opportunity Funds for an investment in the company.
“Cost cutting is needed to help El Al cope with the strong competition in the industry,” Sharon Naveh, head of institutional and international sales at Migdal Capital Markets Ltd., said by phone from Tel Aviv.
The job cuts are part of efficiency measures and further organizational changes that reduce costs are planned, according to a company filing with the Tel-Aviv bourse today. Talks with workers and union representatives are underway to renew employment contracts and review efficiency steps, according to the statement.
“The need for efficiency and to cut costs is an imperative, so that we can continue to cope with the challenges and the rising competition,” Eliezer Shkedi, El Al’s chief executive officer said in today’s statement.
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, lower than 2011’s 5.9 percent figure, the International Air Transport Association said Jan. 31.
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