El Al airlines fired some 600 permanent workers on Wednesday as the company grapples with ongoing financial losses caused by the coronavirus outbreak.
The company has been battered in recent weeks amid a global downturn in travel, government restrictions banning foreigners from entering Israel, and Health Ministry warnings urging Israelis to refrain from international trips.
Other employees in high paying roles are likely to have their salaries cut.
A meeting between representatives of the El Al labor union and company management erupted in disagreement shortly after it started, the Calcalist business daily reported.
The airline also axed hundreds of temporary workers, who are employed by the company for under five years. The fired staff include air crews, flight attendants, ground crews and others.
“This is not an easy day and the steps we decided to take are painful, and are combined with a sense of responsibility and personal example,” said El Al CEO Gonen Usishkin.
“We have known crises in the past, but there is no doubt that the challenge presented to us at this hour, is one of the most complex and difficult. Together we will do everything, as difficult and painful as it will be, to ensure the future of the company,” Usishkin said.
The company appears to be one of the hardest hit in Israel by the virus. On Wednesday, the Bank of Israel said the country’s economy was weathering the crisis, but was ready to step in to help if necessary.
El Al told Israeli investors last week that the company expects to see a loss of $50-70 million in revenue between January and April. The figure did not take into account the halt to flights from Italy. The airline’s shares on the Tel Aviv Stock Exchange have fallen over 23% in the past month.
On Tuesday El Al cut salaries of its senior staff by 20 percent. The salary reduction includes the company’s board of directors and chairman, and retroactively takes effect from March 1, Channel 12 reported.
On Sunday El Al axed some 160 incoming employees and froze the hiring of new workers, after saying last week it was formulating a plan to fire some 1,000 people, nearly one-sixth of its workforce. The company employs some 6,300 people, 3,600 of whom are permanent workers.
Prime Minister Benjamin Netanyahu told the head of the union, Sharon Ben Itzhak, that he had assigned a ministerial committee to help El Al and other Israeli airlines.
“I appreciate the work you do, and we will help you and care for El Al,” Netanyahu said. Transportation Minister Bezalel Smotrich also vowed to aid the airlines.
After halting flights to Italy last week due to the country’s virus outbreak, the company this week cut back on flights to European destinations that have seen relatively few infections, including Vienna, Budapest, Brussels, Cyprus and Frankfurt, due to low demand. More cancellations are expected in the coming days.
El Al last week suspended flights to Thailand, and said it would delay its planned launch of direct flights to Tokyo until April. The airline extended its halt of flights to Beijing and Hong Kong until May.
On Wednesday, Israeli authorities announced that Israelis returning from France, Germany, Spain, Austria and Switzerland must enter 14-day quarantine.
The Kan broadcaster announced the government was mulling issuing an advisory against travel to anywhere in Europe.
Israel has thus far taken far-reaching measures to curb the spread of coronavirus, forcing thousands of Israelis into self-quarantine, barring foreigners from countries hit hard by the virus, banning large gatherings, and advising against personal contact and travel abroad.
Despite the damage to the aviation industry, the Tourism Ministry said Wednesday that the usual number of tourists entered Israel in February, with some 344,000 arrivals and an estimated tourist revenue of $486 million.
The tourism industry has been steadily growing in recent years, and February saw a slight increase of 0.5% over February 2019.
The government imposed restrictions in February on incoming travelers, and Israelis returning from countries hit by the virus, so damage to the industry is likely to be felt in the coming months.
“It should be emphasized that the continued spread of the coronavirus is expected to reduce the number of tourists that will already be felt in the coming month,” Tourism Minister Yariv Levin said. “This is the beginning of a crisis, which could damage the entire industry in Israel, as well as in many countries in the world. It is a global event that is unclear how and when it will end.”
The novel coronavirus emerged in China late last year. It has infected over 93,000 people in over 80 countries, killing some 3,200. Most infections and deaths have been in mainland China.
Israel has confirmed 15 infections and no deaths.