Israel on Wednesday announced an El Al Israel Airlines bailout that will see the government purchasing $ 210 million in advance tickets for security personnel.
According to the Reuters news agency, the tickets are intended for airline security personnel stationed at airports served by El Al and its low-cost subsidiary Sun d’Or for the next 20 years.
The figure will remain the same even if security requirements change over time, according to the report.
The government recently offered to back 82.5% of a $ 300 million loan to the airline, with the understanding that its new owner, Eli Rozenberg, would invest more money and implement a plan that would cut costs. additional.
The finance ministry said in a statement that the note program will replace the loan offer and is contingent on the issuance of $ 105 million principal amount by El Al, meaning the company must provide that sum. through a sale of shares that will complete an injection of 43 dollars. million from the controlling shareholder.
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The ministry said a similar plan would be offered to other Israeli airlines used by air security and that the plan would be presented to the cabinet for approval in the coming days.
The aviation industry has been one of the hardest hit by the coronavirus, as social distancing, lockdowns and border closures have brought flights to a standstill. Following restrictions on international travel, El Al suspended scheduled passenger flights in mid-March 2020. Since then, some flights have resumed to a limited number of destinations.
Israel mostly closed its airport on January 25 and only recently began to relax air travel rules, allowing 3,000 Israelis to enter the country per day before national elections next week.
On Wednesday, however, the High Court of Justice ruled that restrictions on citizens entering the country must be removed, effective Saturday, saying they were unconstitutional and unprecedented in the democratic world.
The move prompted government officials to weigh alternative plans to curtail air travel to prevent the importation of variants that could prove resistant to the vaccines.
According to Channel 12 News, the proposals under consideration include increasing the number of Israelis allowed entry per day to 6,000-8,000.
Officials have already held several meetings on the matter and the network said the government may approve new restrictions that would apparently be accepted by the court. He said no official decision had been taken.
Airlines also appeared poised to increase flights to and from Israel after the 3,000 daily cap was lifted. Israir, Arkia and El Al were to announce the return of several routes, according to Hebrew media.
In December, El Al reported a whopping $ 147 million loss following a 94% drop in revenue for the third quarter of the year, as a second wave of coronavirus “significantly affected” the operations of the company, forcing it to stop regular passengers and cargo flights.
The third quarter financial statements are accompanied by a going concern warning – which expresses doubts about the continued viability of the company – as are its financial statements for the first and second quarters of the year, with plummeting revenues and rising losses due to the pandemic.
Since the onset of the crisis, the company has taken a number of steps to reduce costs and improve cash flow: downsizing, increasing freight activity where possible, outsourcing most of its employees, and reduce the salaries of its board of directors and its board of directors. by 20%. The company also made deals with banks to defer payments, and leases for two 737-800 jets were canceled.
Shoshanna Solomon contributed to this report.