State agrees on backing for NIS 250 million loan to save ailing carrier El Al
Breakthrough plan would also see airline, on verge of collapse, issue NIS 150 million in stocks, with state promising to buy unpurchased shares
After weeks of tense negotiations, the government said it would guarantee a quarter-billion shekel loan for struggling national airline El Al, which is nearing collapse. The carrier has been demanding significant help to stay afloat after being gutted by the coronavirus pandemic, which has brought international travel to a near-standstill.
According to a plan published by the Finance Ministry on Sunday, the company will take a loan of NIS 250 million ($72 million), most of which will be backed by the state.
Additionally, El Al will issue stock totaling NIS 150 million ($43 million) and the state will promise to purchase shares that aren’t bought by others.
El Al notified the Tel Aviv Stock Exchange of the Finance Ministry’s offer, which still requires approval by the company, the government and the Knesset’s Finance Committee, the company said in a statement.
Last month, the carrier warned it was in danger of collapse if bailout negotiations with the government failed, at the same time reporting a dramatic loss in the fourth quarter of 2019.
“Given the uncertainty regarding the assistance, which is needed to allow the company to cope with the impact of the crisis at this stage, the company estimates that there are significant doubts about its continued existence as a going concern,” the airline said in a May 14 statement.
Israel currently only allows citizens and residents to enter, and they must undergo a two-week period of quarantine upon their return to the country. Only a handful of flights enter or leave the country daily.
Tensions at the airline have been high since it slashed its workforce by some 90 percent and dipped into pension accounts to stay afloat.
Adding to the troubles of the struggling national carrier, the Airports Authority demanded last month that it pay back tens of millions in fees it owes for office space and parking for its planes at Ben Gurion Airport over the past three months.
The request for immediate payment comes in light of El Al’s failure to pay the fees since February. The Airports Authority, also suffering financially from the crisis, reportedly needs the funds to replenish its own deflating coffers.
