Sources inform ''Globes'' that IDB Tourism Ltd., controlled by Nochi Dankner is in talks to sell its charter carrier Israir Airlines and Tourism Ltd. to El Al Israel Airlines Ltd. (TASE: ELAL). The source said that El Al executives have already visited Israir.
The sources said that the talks are still only in the preliminary stage, and that there is nothing operative. The valuation for Israir in a deal is still unclear, although it was valued at $38 million at the end of 2010.
The Antitrust Authority would have to approve the merger. This is no small matter in view of the paucity of domestic Israeli carriers.
El Al declined to comment on the report. IDB Tourism said that it did not conduct its business in the media.
The sources believe that the reason for the talks is that El Al is seeking an alternative to its charter subsidiary Sun D'Or International Airlines Ltd., which was shut down after the Israel Civil Aviation Authority revoked its operating license following a complaint by the EU Commission for Aviation that Sun D'Or was not an independent carrier. The EU said that Sun D'Or only used El Al planes and crews.
The sale of Israir would improve IDB Tourism's financial standing. The airline has lost almost NIS 300 million over the past four years.
The global civil aviation industry is going through stormy weather, and economies of scale are critical for survival. A linkup of El Al and Israir could greatly improve El Al's condition, while slashing IDB Tourism's losses. Besides Israir, IDB Tourism owns several travel agencies.
Israir posted an operating loss of $11.5 million on $241 million revenue in 2010. It carried 275,000 passengers and had an average flight occupancy rate of 81%.
Published by Globes [online], Israel business news - www.globes-online.com - on June 27, 2011
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