El Al 2025: How Much the Competition Authority and Legal Overhang Can Change the Story

Where the Gap Opens

The main article already argued that 2026 is El Al's normalization test. This follow-up isolates the layer that is easiest to push aside when reading the operating numbers: the legal, regulatory, and labor overhang no longer sits outside the story. It sits directly on the points that supported the company's exceptional profitability.

The new element is not the mere existence of legal proceedings. Large airlines usually have those. The new element is that provisions already moved sharply in 2025, and after the balance-sheet date three new or sharper fronts were added: an employee-rights class-action request by dismissed or retired workers, two Competition Authority notices, and a Histadrut strike notice tied to the possible opening of a foreign-airline base at Ben Gurion.

So the 2026 test is not only about how much demand remains or how quickly pricing normalizes. It is also about whether the legal and regulatory layer stays an accounting overhang, or turns into cost, pricing limits, and labor friction precisely as the market opens.

The first sign that this risk has already moved closer to the center is the provision bridge. Provisions stood at $8.1 million at the start of 2024, rose to $13.4 million at the end of 2024, and then jumped to $64.4 million at the end of 2025. That means an additional $51.0 million in a single year.

What Is Already on the Table

The Provision Rose, but the Comfort Sentence Is Limited to December 31

There is an important gap here. The company writes that, in management's view and based on legal advisers, it does not expect additional loss beyond the provisions already recorded. On first read that sounds reassuring. In practice it is narrower than it looks.

That sentence relates to the universe of claims that existed on December 31, 2025. In the same note the company explicitly says that the roughly $1.122 billion total of claims and contingencies does not include the January 2026 employee-rights filing over wages, social benefits, and retirement rights of fixed employees who were dismissed or retired. In other words, the comfort line is backward-looking. It does not close the layer that opened immediately after year-end.

The gap between $1.122 billion of claimed amounts and $64.4 million of provision is not proof that a further hit must come. It does mean that claimed amounts, accounting probability, and eventual cash cost are three different layers. Reading only the gross claim numbers is too dramatic. Reading only the provision is too calm. The right read sits in between: the risk is not transparent enough to dismiss, but it is also not automatically equal to the headline claim amounts.

The Competition Authority Is Not Testing the Edges, but the Core of the Exceptional Period

The two Competition Authority notices are the more important part of this follow-up because they go directly to how El Al made money in the exceptional period after October 7, 2023.

The first notice, dated February 8, 2026, concerns a possible sanction of about NIS 121.8 million over allegedly unfairly high pricing. According to the notice, this relates to an average increase of about 16% in economy and premium ticket prices between October 7, 2023 and the end of May 2024, during a period in which the Authority says El Al held monopoly status in inbound and outbound flights to Israel and on specific routes. This is not a technical dispute. It is an attempt to reframe part of the company's exceptional war-period profitability.

The second notice, dated February 23, 2026, expands the risk from a one-off sanction world into a structural-definition world. Here the possible sanction is about NIS 110 million on the company and about NIS 1 million in aggregate on two officers who held office in the relevant period, around an alleged abuse of monopoly position in the market for passenger-aircraft hangars in Israel. Beyond the possible sanction itself, the Authority is also considering declaring the company a monopoly in that market.

This is the heart of the issue. If the first notice asks how the company priced flights during extreme scarcity, the second asks how it behaves in an operational-infrastructure layer with long-term competitive importance. So the real risk is not only how many shekels of fine may eventually leave the balance sheet. The deeper risk is that the period the market read as operating advantage and pricing power could be recast in hindsight as a period of higher competition-law exposure.

There is also an internal context point that makes this harder to dismiss. The company itself already writes that the war and the reduction in foreign-airline activity increased its share of aviation activity at Ben Gurion, with possible implications under competition law. So this is not an outside fight that appeared from nowhere. It is a front the company itself already frames as part of the exceptional-period consequences.

The company disputes both notices, and the officers also dispute the allegations made against them. That matters. These are notices of intent, not final decisions. But the key investor takeaway can no longer be reversed: the company states explicitly that it recorded a provision in the financial statements in connection with these notices. Even for management, this is no longer theoretical language.

The Labor Front Could Harden the Cost Base Just as Competition Reopens

It is easy to read the employee-rights filing and the strike notice as two separate events. In practice they sit on the same economic axis: labor cost, management flexibility, and El Al's ability to enter a more open competitive period without rising internal friction.

The class-action certification request that became known to the company on January 4, 2026 alleges harm to wage rights, social rights, and retirement rights of fixed employees in various sectors who were dismissed or retired. The argument is that a uniform wage mechanism allegedly absorbed collective wage components, including seniority and sector supplements, into a technical item described as a minimum-wage top-up or equivalent components, creating a gap between the total wage actually paid and the qualifying wage used to calculate benefits. The claimed damage was estimated at about NIS 648.765 million.

By itself, this is still an early-stage case. The company said it would study the filing once duly served and submit its response to the labor court. But the subject matter is more important than the cash headline. It suggests that the possible friction is not only about future wages. It is also about how the company calculated historical rights.

The February 19, 2026 strike notice adds a different layer. Here the dispute is not about past retirement rights, but about the future shape of competition. The Histadrut demands collective bargaining over the implications of a possible foreign-airline base at Ben Gurion. The notice explicitly refers to wages, working conditions, job security, flight safety, the company's financial resilience, and ground-operation work.

The company adds that a similar notice was also sent to the other Israeli airlines and to the Airports Authority. That is an important balancing point because it shows the issue is not unique to El Al. But it does not cancel the economic conclusion. If the competitive environment changes, the labor-relations environment across the sector may change with it.

That is the key connection the market can miss. On one side, open skies and returning competition are read as a yield and pricing issue. On the other side, labor relations are read as a separate story. In practice, if competition opens and commercial pressure rises, the company may need more operating and management flexibility, not less. The strike notice is a simple reminder that labor is preparing for that moment too.

What Has to Happen Next for This Layer to Stay Contained

The right way to read this continuation is not through hypothetical fine totals or the raw number of cases. It runs through three practical tests for the next 2 to 4 quarters.

The first is procedural: do the Competition Authority notices remain at the hearing and argument stage, or do they move toward sanctions, a monopoly declaration, or a framework that effectively restricts the company's room to operate. Any such move would immediately change how the market reads the profits of 2024 and 2025.

The second is accounting: does the $64.4 million provision stabilize, or keep moving higher. Even before any major cash outflow, another step-up in provisions would turn the legal layer from general risk language into a more recurring hit to earnings quality.

The third is labor: can management keep the dispute with the Histadrut inside a negotiation track, or will the argument over a foreign-airline HUB, job security, and ground operations translate into higher costs, delays, or operating constraints. That matters especially because wage expense already moved sharply higher in 2025, and an airline entering normalization with a heavier cost base does not have a wide margin for error.

Bottom Line

Regulation and legal risk are not an appendix to El Al's normalization story. They are part of it. The provision already jumped in 2025, and after year-end a new layer was added that touches airfare pricing during the scarcity period, the hangar market, employee rights of retired or dismissed workers, and labor relations around the reopening of competition.

The continuation thesis here is not that El Al has lost control. Far from it. The company disputes the allegations, the proceedings are still at early stages, and the business itself remained strong. But that is exactly why this layer matters: it sits on the places where El Al benefited from unusual relative power, and it can turn part of the last two years' exceptional profitability into a debate about earnings quality, pricing freedom, and management flexibility.

So the right 2026 question is not only how quickly foreign airlines return. It is whether El Al can enter a more open market without carrying into it a legal, regulatory, and labor layer that makes normalization more expensive and more complicated.