I would take it with a pinch of salt at this stage of course, but according to the following article LY are thinking about splitting the company into two separate airlines.
one operating as a full service ("premium" as the article suggested...) operating L/H with their 777s/747s and the other operating S/H as a low cost airline to Europe with their 737s.

Not sure where that would leave destinations like LHR and CDG...


Hebrew:

http://www.themarker.com/consumer/tourism/1.1692796

English:

http://www.haaretz.com/business/el-a...anies-1.426175