El Al chairman: Without immediate aid, airline 'likely to close'

Addressing the Knesset's special committee on dealing with the coronavirus, Defes said the company had presented requests to the Finance Ministry worth a total of $350 million.

El Al Israel Airlines planes are seen on the tarmac at Ben Gurion International airport in Lod, near Tel Aviv, Israel March 10, 2020 (photo credit: REUTERS/Ronen Zvulun)
El Al Israel Airlines planes are seen on the tarmac at Ben Gurion International airport in Lod, near Tel Aviv, Israel March 10, 2020
(photo credit: REUTERS/Ronen Zvulun)
Israeli flag carrier El Al is "likely to close" if the government does not provide financial assistance within the coming days, El Al chairman Eli Defes warned on Monday.
Addressing the Knesset's special committee on dealing with the coronavirus, Defes said the company had presented requests to the Finance Ministry worth a total of $350 million, in addition to an organizational efficiency plan.
"El Al entered the crisis before all the other companies, and its $200m. revenue cycle stopped entirely," said Defes. "El Al is spread out over 30 locations worldwide. If we do not receive immediate help, within the next few days, El Al is likely to close."
Negotiations have been ongoing between the Finance Ministry and Israeli airlines for approximately two months, Finance Ministry economist Eli Morgenstern told the Knesset committee.
While airlines Israir and Arkia meet the criteria to receive assistance from the government's loan fund for large companies, the scope of El Al's operations requires separate negotiations to receive aid.
Morgenstern insisted that a rescue package must include both government-guaranteed and bank-guaranteed loans.
"We believe that within one to two years, we will be profitable and can return the loan," Defes told the committee, accusing the Finance Ministry of stuttering in its efforts while other governments roll out financial assistance plans to aid airlines.
On Thursday, El Al said that it would continue to ground all scheduled flights to and from Israel until May 2, with the exception of "rescue flights" to repatriate Israeli nationals abroad and some cargo flights.
The across-the-board cancellations, originally announced until April 4, followed a sharp decline in demand, concern for passenger and staff health, and the need to reduce expenditures until the outbreak subsides. The vast majority of workers have been placed on unpaid leave.
Yaakov Ganot, director-general of the Israel Airports Authority (IAA), called on the government to ensure that Israel maintains the "operational fitness" of all airport and border crossings' infrastructure, ensuring that the country is ready for the day after the crisis.
Citing "zero income," Ganot said the IAA is currently planning a further round of redundancies and unpaid leave.
More than 380 hotels are currently shut nationwide, and a further 17 have been rented out to house coronavirus carriers, Israel Hotel Association president Amir Hayek told the committee.
With 30,000 employees on unpaid leave and a further 7,000 made redundant, the tourism industry "is bleeding between NIS 150 million to NIS 200 million" on a monthly basis, said Hayek.
"There is a very large problem today with making courageous, out of the box decisions," Hayek said. "When I talk about hotels, it is not disconnected from our employees. If we lose them, it will be very difficult for us to stand on our feet again later."
Israel enjoyed another unprecedented year of incoming tourism in 2019, with approximately 4.55 million tourists visiting the Jewish state. Incoming tourism during 2019 injected approximately NIS 23 billion into the economy.
Tourism Ministry director-general Amir Halevi attacked the Finance Ministry for its lack of understanding and consideration of the day after the crisis subsides, lamenting that "budgets had been drained and the marketing system had stopped entirely."
Emphasizing ongoing discussions with foreign airlines t o exempt them from airport charges for a year after the crisis ends, Halevi said the ministry's complete lack of funds will lead to "devastating consequences" for Israel's tourism industry.


Tags El Al