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

And what will that accomplish other than some optical changes?
How exactly is flying from YYZ in a 767 considered a "premium"?

According to Haaretz:
El Al Israel Airlines is considering splitting into two companies as part of a new strategic plan - a low-cost carrier and a premium carrier.

Indeed, the airline needs efficiency measures and might face new competition due to the open-skies agreement that Israel signed with the European Union.

One of the two companies would specialize in premium long-haul flights to destinations such as the United States and the Far East, while the second would compete against low-cost airlines on European routes.

The two firms would share the same management.

The long-haul company would use El Al's new wide-body planes, including Boeing 777s. The planes would be upgraded with fully reclining seats, and ticket prices would be set accordingly.

The second company would use El Al's smaller planes, including Boeing 737s. This would help it compete against low-cost airlines, which are expected to increase Israeli operations once the open-skies treaty takes effect.

"The company is working to develop a strategic plan involving its future structure," El Al said.

The company lost $49 million last year, and management is in talks with workers over new efficiency measures. El Al is asking workers to accept fewer free flights and to pay for meals based on their salary levels. It also wants to put up flight crews in hotels outside city centers.

In addition, the company's chairman, chief executive and board members have accepted 20% salary cuts, while managers have seen their salaries cut by 7% to 10%.

ugh, all El Al needs is more dumb complication in their life.

Why not just offer competitive prices with competitive "drop dead" terms like the LCCs? You want a cheapo ticket? expect to pay for bags, seats, meals etc, no FF miles, etc.

And LY has one of the best/easiest markets to capture for business travelers. But nobody in their right mind would fly YYZ/NYC/LHR-TLV on a grossly inferior seat, so they're losing tons of money there while their competitors are minting money. CO SELLS 90+% of their business class seats on EWR-TLV for money (100 seats/day capacity).