El Al Israel Airlines Ltd. (TASE: ELAL) reported that it has begun talks to merge the business of its subsidiary Sun D’Or International Airlines into Israir Airlines and Tourism Ltd., owned by IDB Development Corporation.
Sun D’Or is active in charter flights, leasing an airplanes’ seating capacity at prices agreed in advance, selling seat packages to agents, and to the general public.
According to the emerging deal between the parties, this activity will be transferred into Israir, and El Al will receive a number of Israir shares in exchange, to be determined in a valuation of the companies.
The initial proposal discussed between IDB and El Al set a valuation of $30 million – $40 million for Israir , while IDB Tourism obtained a $149 million valuation from a consultant firm for Israir’s business, excluding debt.
Israir operates three airbus 320 jets to Western European destinations and two ATR 72s to Eilat, the southern Israeli resort town that El Al no longer flies to. It ended 2014 with a loss of 18.5 million shekels ($4.8 million) on sales of 841 million shekels ($240 million). It was hit by the drop in travel after last summer’s Gaza war.