With sympathies to all the El Al employees who are on unpaid leave - unfortunately i think the long term best interest of country and El Al is to let it fail.
But then help formulate the successor company to El Al in a way that will be sustainably profitable in the good times and at least not have massive losses the rest of the time.
El Al has unique challenges as the national airline - security and Shabbat in particular. And then there are the excessive pay standards for pilots and management. In the current political climate i dont see it as likely though that anyone will take that courageous decision to let it fail. If it does fail, another local airline will surely take its place (see Swissair and Swiss)
El Al was barely profitable in most of the last 5 years which were boom times to the rest of the airline jndustry. If the government will bail out El Al it should be conditioned on serious reform of the whole company.
The CEO asks if having a national airline is important to national security. It is - up to a point. Right now El Al is shutting down all their flights while United and BA are still flying to Israel.