Israeli Airlines Calls For Government Bailout For COVID Losses

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Israel’s flagship airline and two other local carriers on Thursday demanded that the government provide them with financial and regulatory support, warning that otherwise they could collapse due to the effect of the coronavirus pandemic on the travel industry.

A letter signed by the CEOs of El Al, Arkia and Israir – sent to Prime Minister Naftali Bennett, Finance Minister Avigdor Liberman and a range of other lawmakers and officials – blamed government policies for having their businesses cratered and called for a rollback of travel restrictions, claiming their industry had missed bailouts offered to other sectors.

“There are doubts that Israeli airlines will be able to survive the crisis without government support,” wrote CEO of El Al Avigal Soreq, CEO of Arkia Gadi Tepper and CEO of El Al Avigal Soreq. ‘Israir Uri Sirkis.

In the letter, the companies noted that the aviation industry has been in crisis for a year and a half due to the coronavirus outbreak – during which they have operated under “conditions of grave uncertainty” as demands for trips were decreasing.

The lull in passenger numbers was directly influenced by government decisions and health ministry orders, CEOs argued. Quarantine rules, entry bans for non-citizens or residents, and government calls not to take unnecessary flights have all had an impact, the companies noted.

El Al had experienced financial difficulties before the COVID pandemic struck and largely wiped out international travel. Last year, the airline was bought by Eli Rozenberg, a 27-year-old yeshiva student, who was financially supported by his non-Israeli father, Kenny Rozenberg. Earlier this year, senior Rozenberg became an Israeli citizen – a requirement for owning a controlling stake in Israel’s national airline – and took control of the company.

By way of illustration: An El Al Boeing plane at Ben-Gurion International Airport in Israel. (Flash90)

A comprehensive bailout deal struck between El Al and the government last year called for the airline to lay off nearly a third of its staff in exchange for $ 210 million from the state for the early sale of tickets to security personnel. To complete the transaction, El Al also agreed to issue $ 150 million in new shares and the majority shareholder to inject $ 43 million into the company.

However, on Wednesday Soreq sent a letter to treasury manager Ram Belnikov, saying the $ 210 million bailout was not enough to pull the airline out of its downfall.

Soreq has requested $ 100 million in immediate compensation for the impact of COVID-19 restrictions, to be included as part of a plan to streamline its operations in return for government assistance. This figure is double the $ 50 million the finance ministry offered El Al in the form of a balloon loan.

El Al’s stimulus package will see it sell planes to reduce its fleet from 45 to 29 while downsizing as a result, Soreq said.

El Al reported a loss of $ 86 million in the first quarter of the year, compared to a loss of $ 140 million in the same period a year earlier. Revenue fell 64% to $ 117 million from $ 321 million in the same period a year earlier, and costs, including wages and jet fuel, fell 54%. For the whole of 2020, amid the pandemic, El Al saw its net loss climb to $ 531 million from $ 60 million in 2019.

On Thursday, the three airlines asked Bennett to call a meeting with the ministries of finance, transport, tourism and health to discuss “concrete and detailed proposals and the necessary measures the government must take to ensure the sustainability of Israeli aviation. . “

He noted that many governments around the world have provided assistance to their own local airlines, posing an additional challenge for Israeli companies that have found themselves competing with those receiving state support.

They pointed to Bahrain’s recent approval for its national carrier to operate a route to Tel Aviv, while Israeli companies have yet to be approved by local authorities to offer a similar service.

“Local airlines are vital national infrastructure,” they noted, warning that their collapse would harm vital national interests.

Travelers arrive at Ben Gurion International Airport near Tel Aviv on September 10, 2021 (Yossi Zeliger / Flash90)

Among the measures requested by companies was a compensation model similar to that offered to other industries affected by the COVID-19 economic crisis, as well as a review of a finance ministry plan that requires investment from homeowners. ‘aviation companies, which has not been done in other industries.

The companies have also requested a risk management assessment of health regulations at Ben-Gurion International Airport, including quarantine requirements for those arriving in the country.

They also sought a framework to allow vaccinated tourists to enter the country by performing PCR or serological tests at the airport, currently available only to Israelis and some visitors.

Shoshanna Solomon and The Times of Israel staff contributed to this report.

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