El Al: Revenues could drop by $160 million due to coronavirus outbreak
The increased cut in revenues follows a significant drop in consumer demand and shrinking operations due to increasingly strict restrictions on travel imposed by the Health Ministry.
By EYTAN HALONAn Israeli flag is seen on the first of Israel's El Al Airlines order of 16 Boeing 787 Dreamliner jets, as it lands at Ben Gurion International Airport, near Tel Aviv, Israel August 23, 2017. REUTERS/Amir Cohen(photo credit: REUTERS/AMIR COHEN)
Israeli flag carrier El Al expects revenues to plunge $140 million-$160m. between January and April due to the novel coronavirus outbreak, it said Sunday in a filing to the Tel Aviv Stock Exchange.The increased cut in revenues follows a significant drop in consumer demand and shrinking operations due to increasingly strict restrictions on travel imposed by the Health Ministry, El Al said.According to revised estimates, reduced operational costs will offset some of the declining revenues, with overall damage estimated to be $70m.-$90m. by the end of April, it said.“Naturally, this is an evolving event outside of the control of the company,” El Al said in a statement. “Factors including the continued spread or stopping of the virus, decisions by countries and relevant authorities in Israel and abroad to stop or resume flights to different destinations, setting guidelines with regard to different destinations, or changes in demand, are likely to affect the company.”Talks with the Finance Ministry to request financial support from the government are ongoing, El Al said, adding that it is taking operational and financial measures to reduce expenditures.Last week, El Al announced its intention to lay off 1,000 permanent and temporary staff – almost one-sixth of its workforce – as it rolled out a series of cost-cutting measures implemented to “ensure the future” of the company. In addition, company executives and directors will be subject to a 20% wage cut, effective retroactively from March 1.Due to travel restrictions imposed by health authorities, El Al has canceled all flights to China, Hong Kong, Thailand and Italy. It postponed the long-awaited launch of a nonstop route to Tokyo scheduled for March 11.El Al also has canceled a series of flights to European destinations amid falling domestic and international demand.Israeli nationals arriving from mainland China, Hong Kong, Thailand, Singapore, Macau, South Korea, Japan, Austria, Germany, Spain, France, Switzerland and Italy are required to spend two weeks in home quarantine. Foreign citizens arriving from these places are not permitted to enter the country. Quarantine is also necessary for passengers traveling on connecting flights via mainland China, South Korea and Italy.The Israel Airports Authority announced Sunday that 70% of its temporary workers would go on unpaid leave. To reduce the impact on workers’ families, unmarried employees would be put on leave before married staff, it said. Security staff at the authority’s airports and land-to-land border terminals also would be reduced to 150 employees, it said.Additional measures include the cancellation of training courses and halting the recruitment of temporary staff expected to return to work ahead of the busy summer season, it said.Given the reduced amount of air traffic, all international flights to and from Ben-Gurion Airport will operate from Terminal 3. From March 14 to the end of April, Terminal 1 will close to international flights but will remain open for domestic travel, the Israel Airports Authority said.-
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