El Al CEO Elyezer Shkedy announced his resignation on Sunday, December 1, which will go into effect as soon as his position has been filled.
Without citing any particular reason for the departure, Shkedy wrote a letter of resignation to El Al employees. "I am finishing my position with pride and a sense of great satisfaction,” he said, calling the position “one of the most challenging positions in the Israeli economy.”
In the four years since Shkedy headed the airline he has caused a stir and leaves a trail of questionable decisions in his wake. Most notable is his recent failure to secure the $75 million investment through FIMI this past October. The investment fell through because Shkedy failed to reach a labor agreement with the unions.
El Al quoted Shkedy as saying he regretted this failing to reach a new collective labor agreement with unions, as it is considered a key element in the company’s ability to compete. “El Al must reduce spending for the sake of a better future for its personnel and passengers if it wishes to continue to grow and compete in the field of aviation, which is variable and challenging,” Shkedy said in the statement.
Since Shkedy took the airline’s helm in 2010, it has registered a loss of $17.4 million and its share price has fallen 38 percent, according to recent reports, though the company swung back into profitability in the first three quarters of the year. El Al reported its third-quarter profits to have risen 54% from a year ago to $58 million, while revenues climbed 6% to $643 million and passenger loads increased 5%.
Still, the airline faces increased competition as the “Open Skies” agreement with the European Union goes into effect, which Shkedy had fought hard to prevent from occurring. Open Skies will loosen restrictions on the number of carriers and flights between Israel and EU destinations.
According to the Jerusalem Post insiders have speculated that losing the FIMI investment was likely a factor in his decision to step down as CEO.
“On some level there was internal criticism from the board that Shkedy didn’t do enough to get FIMI on board and try to push for an agreement with the union,” an airline industry source told The Jerusalem Post. “When you can’t bring in a big investor – and FIMI is one of the most serious investment houses tied to Israel – it doesn’t bode well.”
El Al’s chairman of the board, Amikam Cohen, dismissed any suggestions that there was internal pressure for Shkedy to step down.
“The board regretfully accepted Shkedy’s announcement on his decision to end his role and added that Shkedy’s special personality, management and contributions to the El Al company deserved special appreciation, and were expressed in every work area in a very complex and challenging company,” he said in a statement.
Serious challenges await whoever is chosen to replace Shkedy. His successor will need to work out how to cut costs and streamline the company’s management and workforce, and decide whether to change its Shabbat no-flight policy to increase its flights.
A former Air Force commander, Shkedy has been reportedly saying that he is leaving the company simply because he has reached his limit there, according to Ha'aretz.
Shkedy will stay on for another two months until a successor has been named, El Al said in a statement.