El Al's history: Everything you need to know about Israel's flag carrier airline - explainer
Bring them home! In times of war and peace, when most other airlines have ceased flying to Israel, El Al flies. Here's what you need to know about the Jewish state flag carrier.
But lately, “Bring them home” took on new meaning. On Friday, November 8, Islamist rioters attacked Maccabi Tel Aviv soccer fans in Amsterdam. Many were parents with children, there to see the match against a strong Dutch team, Ajax (Maccabi lost 5-0).
Local police did virtually nothing. Ten Israelis were hospitalized. It became urgent to get the 3,000 Israeli fans home to Israel. Six rescue flights were organized, led by El Al, and 2,000 fans were quickly flown home. El Al does not normally fly on the Sabbath. But newly elected chief rabbis David Yosef and Kalman Bar approved the flights as lifesaving. And El Al footed the entire cost of the rescue operation, to the tune of millions of shekels.
Bring them home! In times of war and peace, when most other airlines have ceased flying to Israel, El Al flies. El Al has flown rescued hostages home from Entebbe, Uganda; piled more than 1,000 Ethiopian Jews into a Boeing 747 and airlifted them to Israel, after ripping out seats and landing and taking off from a clandestine Sudan desert runway; and flown reserve soldiers and military cargo to Israel on and after October 7. (A note on the record flight from Entebbe: Guinness World Records put the number at 1,088, including two babies who were born on the flight – meaning that the number of passengers who departed was not the same as the number who landed.)
When was El Al founded and how did it get its name?
El Al was born in September of 1948, out of urgent necessity, like many things when Israel was founded. President Chaim Weizmann attended a conference in Geneva. He was due to fly home in an Israeli government aircraft, but a Swiss military embargo imposed on Israel, based on Swiss neutrality, made this impossible. So an Israeli C-54 military transport plane was converted quickly to civilian use.
Is El Al privately owned or state-owned?
Private – after privatization, it was first controlled by the Borovitz family.The Borovitzes, under their scion Prof. Izzy Borovitz and brother Dadi, owned Knafaim (“Wings”), which operated Arkia, a mainly domestic airline. The company did an initial public offering of shares in 1993. In 2003, it began buying El Al shares and gained control in 2005. At the time, two government companies were privatized: Israel Discount Bank and El Al.
For a time, in the wake of the COVID-19 pandemic, it seemed that El Al might actually shut down, blindsided by 2020-2022 pandemic. El Al went from a soaring high to a menacing low, ultimately causing the Borovitz family to lose control of the company. The state granted a loan to El Al, all of which was repaid. At the same time, El Al went through a massive streamlining program that has been maintained until today, and it is also part of the growth equation in revenues and profits
The ups and downs of life in Israel often feel like a huge roller coaster. This is true of El Al in particular. Few companies have gone on a dizzier roller coast ride than El Al, from profit to near-demise to soaring profit. El Al thrived – until COVID hit in 2020, and a downward spiral ensued. All flights were canceled; El Al owed a billion shekels ($288 million) to those who had paid in advance for tickets. Some 5,800 of its 6,500 employees were put on unpaid leave. At one point, El Al reported a quarterly loss of $140 million.
The Israeli government holds a controlling golden share. It rescued El Al with a big loan guarantee, contingent on a stock offering that caused El Al’s then-controlling Borovitz family to lose control. El Al was essentially up for sale – and there were understandably no buyers.
Until a rather unlikely customer emerged – Kenneth Rozenberg.
Who are the Rozenbergs?
Kenneth (Kenny) Rozenberg, 58, is an Orthodox American Jewish businessman who started and built Centers Health Care, an organization made up of nursing and rehab centers and many other healthcare and non-healthcare companies in New York. Centers Health Care has more than 30 centers and more than 40,000 employees working at its various companies. The Rozenbergs boldly financed their family’s purchase of a 42.85 percent of El Al’s shares in 2020.“I don’t regret it for one second, although I would prefer that it happened without the negative publicity and without the slurs, but El Al will become a profitable business,” Rozenberg pledged in his only interview to date with the business daily Globes at his home in Jerusalem after acquiring control of El Al. “It would not be an exaggeration to say that the State of Israel flows through my veins, and it excites me every time I see an El Al plane with the Israeli flag landing in New York, London, Paris, and anywhere else in the world. The historical challenges that the company has carried out did not go unnoticed during the acquisition. I declare this because I am committed to El Al, and I take full responsibility as part of proper corporate governance to maintain stability and nurture growth, especially during this period.”
Rozenberg made aliyah in September of 2021. His bold roll of the dice turned out to be immensely profitable.
El Al today has a market value of some $850 million, after becoming almost the only airline game in town when other airlines canceled all flights.
How crucial is air travel for Israel?
Very crucial. Throughout the current war, El Al has been the only airline to fly consistently to and from Israel.In 2019, the peak year for air travel, before COVID and the Israel-Hamas War, a record 24 million international passengers passed through Ben-Gurion Airport, with El Al garnering over a quarter of all international traffic.
Two other Israeli airlines – Arkia and Israir – handled about three percent each. Israir has applied to fly from Tel Aviv to Newark, while Air Haifa recently launched flights to Larnaca and Athens, providing some competition for El Al.
With hostile borders – even those of Egypt and Jordan, which are formally at peace with Israel – Ben-Gurion Airport is Israel’s essential gateway to the wide world.
Who runs El Al?
El Al’S CEO is Dina Ben Tal Ganancia, an El Al veteran who was formerly its vice president of commerce. Strategy consultant Eran Gefen interviewed Ganancia for Globes in June. During the COVID crisis, when El Al and most airlines shut down, many managers and workers left. “There was a stage when there were just a few of us left,” Ganancia told Gefen. “I would bring the Dyson [vacuum cleaner] from home and vacuum, and also manage the company’s entire cash flow in Excel.”The interim El Al CEO, Avigal Soreq, originally from Delek US, left after a year. Who would replace him? El Al’s new owner Kenneth Rozenberg did not yet know Ganancia. “Would he appoint someone he doesn’t know – and a woman to boot?” she asked herself. “I’ve been here for 16 years. I’ve done purchasing, I know cargo, I’ve worked in maintenance, I’ve been in commerce for many years. I’m prepared.”
In May 2022, she was appointed the first female CEO in the airline’s history.
Is El Al price-gouging?
Ganancia responded to the sensitive issue of price-gouging in her interview with Gefen. She explained that El Al’s fleet of planes “cannot reproduce.” Aviation works on supply and demand. El Al’s ability to add flights is thus limited. And, she added, “we are obliged to leave some seats for the last minute, and the only way to do that is through [price] differentiation.”Like all airlines, El Al uses dynamic pricing based on a computer algorithm. It balances individual ticket pricing with the capacity of the plane. The price of a plane ticket is based on demand for a flight, seats available, and the timing of booking. Most governments do not regulate air fares but do regulate refunds and compensation for canceled flights.
The business cable network CNBC asserts that globally, air fares have risen by 25% overall since COVID; El Al fares appear to have risen far more, in most cases. El Al has responded to criticism by adding fixed-price flights to four connecting destinations: Cyprus, Vienna, Dubai, and Athens.
As for expanding the fleet, El Al has signed a $2.5 billion deal with Boeing to buy up to 31 737 MAX aircraft. Presumably, some of the profit will go toward renewing some of El Al’s aging fleet.
Worldwide, airline industry revenue and profits are soaring. Revenues will reach $1 trillion this year, up some 15 percent.
In its third-quarter financial report, El Al posted a record net profit of $187 million, three times higher than a year ago, on revenue of $1 billion. El Al says that “the growth stems from extraordinarily high occupancy rates and high demand for the company’s flights because of the decline in flights by foreign airlines.”
Does El Al have good customer service?
In June, my wife and I flew to Boston on a direct El Al flight. I’ve flown El Al a lot in the past, to conferences and lectures, and prepared myself for the worst. I was pleasantly surprised. The check-in was fast and efficient, the in-flight service was courteous and professional, and the flight was on time.I believe the old El Al had a cultural problem. The Bible asserts that the Jews are a stiff-necked people. We do not easily engage in subservience to others, even if it is good business practice to do so. I can’t imagine an Israeli flight attendant acting as submissively as, say, a Singapore Airlines attendant. Somehow, the new El Al management has cracked the problem. In fact, I would rank El Al service equal to or better than that of Delta, American, and United – the US’s three biggest airlines. Better – because those airlines do not currently fly to and from Israel. So they have no service.
Are El Al planes safe?
El Al is the only airline equipped with costly missile defense systems. About 80 percent of its more than 700 pilots are Israeli Air Force (IAF) veterans, and each flight has a trained air marshal. It’s fun to try to spot them, though I usually fail.Has El Al bounced back from near bankruptcy?
In spades! At the time of writing, the market value of El Al shares was NIS 3.2 billion ($850 million). Its share price has risen from NIS 374 in January to nearly NIS 800 today, more than double. Second-quarter 2024 revenues were $839 million, up a third from a year ago, and net profit of $147 million more than doubled. El Al shares have now been included in the Tel Aviv Stock Exchange’s TA-125 index.El Al during the war
At midnight on April 13, Iran fired 120 ballistic missiles at Israel, along with drones and cruise missiles. There were warnings hours earlier. At the time, Ganancia was playing catchball (a team sport derived from volleyball and invented in Israel, in which the ball is caught and thrown rather than hit). With her kneepads still on, she raced to Ben-Gurion Airport and went into the bunker, an underground city dating back to British Mandate times. El Al planes were on the ground, awaiting departure for cities around the world. “Planes cannot be brought into the bunker,” Ganancia said. “How do you manage this risk? It’s not something you learn in an economics course.”Most of the Iranian missiles were intercepted and destroyed by Israeli, US, and British forces. It took about a week to restore the El Al flight schedule.
One thing struck me in reading Gefen’s interview. Gefen recounted that “I have known more than a hundred CEOs… but never had I seen one well up with emotion when talking about work.” This has been my experience as well. Senior managers are not supposed to show emotion – certainly not tears!
“But Ganancia had tears in her eyes when discussing the airline’s role during the current war,” Gefen wrote. El Al’s market share in November of 2023 was 81% – when other airlines shunned Tel Aviv.
I truly value those tears. El Al flies in war and peace. It is indeed something to appreciate, take pride in, kvell, and even shed a tear over. Israel’s much-maligned national airline, one that in the past many of us loved to hate and avoid, is back, with renewed vision and energy. It is vital that it thrive, enabling Israelis to continue to engage with the world. I count this among the few positive blessings that emerged from this terrible war.
Postscript:
Following a ceasefire with Hezbollah at the end of November, it was expected that foreign airlines would renew flights to Israel. Some said they would. However, reporting in The Jerusalem Post, Stav Livne noted that many were balking, demanding changes to the current law that requires airlines to compensate passengers for flight cancellations and changes. Foreign airlines, including low-cost Wizz, say the law is “unsuitable for prolonged wartime emergencies” and makes their activity in Israel financially unprofitable (partly due to hikes in insurance costs). Livne quotes a legal adviser for 15 foreign airlines: “To give passengers an alternative flight means companies have to bear costs that sometimes reach 500 times the original cost.” The Knesset has debated amending this law for many months, with no decision yet. In the meantime, we always have El Al.
