July 3, 2017 / 11:12 AM / 2 months ago

El Al Airlines in deal to buy low-cost rival Israir

FILE PHOTO - Baggage carts are seen on the tarmac near an El Al Israel Airlines plane at Venice airport February 1, 2016.Alessandro Bianchi

JERUSALEM (Reuters) - Flag carrier El Al Israel Airlines (ELAL.TA) said on Monday its Sun d'Or unit agreed to buy smaller low-cost rival Israir from IDB Tourism.

Sun d'Or, which flies to 17 destinations in France, Italy, Switzerland, Greece and elsewhere in Europe, will pay up to $24 million for Israir. IDB Tourism will also receive a 25 percent stake in Sun d'Or.

Israir, which flies to 28 cities in Europe, will become a wholly owned unit of Sun d'Or. The airline has 650 employees and earned $11.7 million in 2016 but lost $1.5 million in the first quarter of 2017.

El Al said the deal is expected to be signed in the coming days, with closing planned for Dec. 31. It still needs various approvals, including from the antitrust regulator as well as the signing of a new collective agreement with Israir pilots.

It may be canceled should the deal not be completed by March 31, 2018.

As part of the deal, Israir will sell to third parties the four aircraft it owns for $70 million and lease them back.

On Sunday, El Al's board approved the plan.

Reporting by Steven Scheer; Editing by Tova Cohen

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