El Al reports huge expected losses due to coronavirus travel slump

Revenues for January-April to decline by up to $160 million; Israel Airports Authority to close Ben Gurion’s less-used Terminal 1

El Al's new  Jerusalem of Gold Boeing 787 Dreamliner arrives at Ben Gurion International Airport,  September 19, 2019.  (Flash 90)
El Al's new Jerusalem of Gold Boeing 787 Dreamliner arrives at Ben Gurion International Airport, September 19, 2019. (Flash 90)

Israel’s national carrier, El Al, expects revenue to decline by $140-160 million for the period from January to April 2020 as a result of the suspension of multiple lines and declining demand in others due to the worldwide outbreak of coronavirus, the company reported in a statement to the Tel Aviv Stock Exchange on Sunday. 

El Al said revenue decline for the first quarter would amount to $80-90 million, while it expected losses for the same period of $70-90 million. Losses for the period from January to April are expected to total $80-90 million. El Al said losses would be offset to a certain extent by cuts in operating expenses.  

The company said it had not taken into account in those figures instructions issued by the Health Ministry on March 4 requiring Israeli citizens returning from France, Germany, Switzerland, Spain and Austria to go into quarantine, and banning nationals of those countries from entering Israel.

Israel has banned visitors from several countries and advised citizens not to travel abroad, and airlines around the globe are suffering setbacks from a decrease in travel due to the virus.

El Al shares were trading down by around five percent shortly before closure on the TASE after having slumped by as much as 8% earlier in the day.  

El Al said it would be taking a number of measures to reduce the impact of the crisis, among them: adjustments to its flight routes, based on government guidelines and falling demand; operational and financial adjustments to reduce its expenses and alleviate cash flow reduction; staff layoffs, with the carrier already have begun laying off some 20% of its workforce; and requesting government aid. 

Israel announced Sunday a $1.1 billion fund to help companies struggling because of the effect of coronavirus. 

Meanwhile, the Israel Airports Authority said it would be consolidating all international flights from Ben Gurion International Airport Terminal 1 to Terminal 3 as of March 14 through to the end of April.

Domestic flights will continue to operate from Terminal 1, a relic from the airport’s earlier days used by some charter firms and budget airlines for short-haul flights.

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