El Al Israel Airlines Ltd., the nation’s flagship carrier, said Thursday it posted a massive half-a-billion-dollar loss in 2020, as its passenger flights were grounded for most of the year due to the coronavirus pandemic.
The company said it lost $531 million in 2020, compared to a loss of $59.6 million in 2019. Revenues from operations for the year plunged 71 percent to $623.1 million, compared to revenues of $2.2 billion in 2019, due to the cancellation of regular passenger flights from February 2020. Since the fourth quarter of 2020 some flights to some destinations have resumed.
Revenue from cargo flights surged 100% by some $132 million in 2020, compared to the previous year, the company said.
The “dramatic drop in demand” for passenger air transport and freight, to a lesser extent, due to the COVID-19 pandemic and other containment measures “is threatening the viability of many firms in both the air transport sector and the rest of the aviation industry, with many jobs at stake,” the OECD said in an October report.
Troubled El Al, which put most of its workers on furlough as flights were halted, in September was acquired by Kanfei Nesharim, controlled by Eli Rozenberg, and has a new board of directors and chairman.
The company said in a statement on Thursday that it was setting out a new strategic plan that, along with efficiency measures it plans to implement this year, will bring the carrier to a new “starting point” for when air travel will resume more broadly.
To tide itself over, in September 2020 and February this year the firm raised some $222 million dollars in the capital markets. The company has also signed a bailout plan with the Finance Ministry that will see the government purchase $210 million worth of advance tickets for security personnel over the next 20 years. The plan replaces a loan-guarantees offer, and is contingent on El Al issuing capital of $105 million, meaning the company has to come up with that sum through a sale of shares that will supplement an injection of $43 million from the controlling shareholder.
“El Al suffered a severe blow this year, and was forced to take painful measures, including reducing the number of employees, to ensure its survival,” incoming CFO Itzik Eliav said in the statement.
El Al’s new CEO Avigal Soreq said the company was implementing an efficiency plan that will see it cutting some 2,000 workers. It is also planning to repay debt to customers for tickets that were not used, and to other lenders, suppliers and craft lessors, by refinancing its loans. The firm owns customers some $238 million for pre-paid and unused tickets.
Pre-pandemic, the firm employed some 6,300 workers. That number will drop to 4,300 after the layoffs are implemented.
The financing outline reached with the government, the implementation of the efficiency plan, and implementing new and innovative work processes will bring the firm to a cash flow balance during 2021, he said, and positive cash flow in 2022.
At the same time, the company is working on implementing a renewed multi-year strategic plan to emerge from the crisis, Soreq said. Along with the opening of the skies and of Ben Gurion Airport, and the expected gradual increase in activity, the company expects to return to activity in 2022,” which will enable it to implement a business plan “for long-term growth and profitability.”