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EL AL Seeks $400 million From Israeli Government
Israeli flag carrier El Al, which has been crippled by the COVID-19 pandemic, is seeking state-guaranteed bank loans of up to $400 million after finding itself in a serious cash flow crisis leading to a halt in its passenger operations.
The company has already taken various measures to tackle the crisis to improve its liquidity by sharply reducing its expenses, suspending its investments and reducing its workforce.
“El Al is one of the Israeli economy’s most significant corporate casualties from the coronavirus crisis, and for this reason we asked the Israeli government to assist El Al as most countries in the world have done. In the last two months the company’s management team has been working around the clock to implement a series of operational and financial measures aimed at reducing the company’s expenses, maintain its liquidity and allow it to operate,” said the company’s CEO Gonen Usishkin
The company’s CFO, Dganit Palti, pointed out that, “concurrently therewith, we carried out financial transactions to improve the company’s liquidity, inter alia, sale and leaseback of three aircraft. We established a business plan containing profound streamlining measures that are currently in the process of implementation and we expect the decision to provide a guarantee for a $400 million bank loan, that will allow the company to return to growth and profitability.”
However, with the continued negotiations with lenders and the government and the uncertainty caused by the delay, the company would be a little uneasy with its continued existence. A cash injection is rapidly becoming a key factor for the company to address its troubles at this stage that is caused by the pandemic.
The all-Boeing airline also announced it posted a significant net loss of $60 million in 2019 compared to $52 million the previous year. It also completed the removal of its older fleet in the same year whilst receiving 14 Boeing 787 Dreamliner aircraft.
El Al flew into its unknown fate when the COVID-19 pandemic hit the aviation industry, abruptly stopping its momentum of activities and consequently reducing its passenger demand.
Earlier this month, El Al decided to extend the suspension of its passenger flights until June, operating solely cargo and rescue flights drawing its focus on social distancing measures among passengers on its flights.
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