El Al agrees to shoulder higher security costs

Dina Ben Tal Ganancia  credit: Guy Kushi & Yariv Fein
Dina Ben Tal Ganancia credit: Guy Kushi & Yariv Fein

In exchange for lowering the government's security spending burden, El Al expects state permission to distribute dividends.

As reported by "Globes" in January, El Al Israel Airlines Ltd. (TASE:ELAL) is seeking state approval to distribute a dividend on its profits before the end of 2025. The airline, led by CEO Dina Ben Tal Ganancia, has moved a step closer today to this goal by announcing its readiness to take on more security costs. In other words, the state will contribute slightly less to El Al's security costs.

This move is a very significant step for El Al. The state's approval of the dividend will open the door for El Al to distribute huge sums to investors, first and foremost the company's owner, Kenny Rosenberg, who acquired control of the company during the Covid pandemic.

According to El Al's announcement, the state's contribution to El Al's security expenditure will fall in the coming years, from 97.5% today to 95% next year, 94% in 2026 and 92.5% in 2029. The company also estimates that the cost to the company will be $5-10 million per year, but no more than $13 million, indexed to the Consumer Price Index (CPI) and that the ceiling will increase by $500,000 in 2028 and 2030.

The state has not permitted El Al to distribute dividends since 2017 but the airline is hoping to get the green light to do so, perhaps, market sources believe, even before it publishes its fourth quarter results in the coming days.

El Al recorded huge profits in 2024

The airline's desire to resume distributing dividends follows unprecedented profitability, due to its dominance of Israel's skies throughout the war. In the first nine months of 2024, El Al recorded a profit of more than $400 million, and is expected to end the year with a profit of about $500 million.

El Al recently reported optimistically to investors, "The company is conducting advanced negotiations with the state on the issue of reducing the company's obligations, as stipulated in additional agreements with the state in 2021-2022, including on the dividend distribution restriction. The Accountant General at the Ministry of Finance has been authorized, by government decision, to sign appendices to the agreements signed with Israeli airlines, on the purchase of flight tickets for flight attendants and aviation security system employees, regarding changing terms relating to the distribution of dividends in 2025 by the companies, and all is subject to his discretion and terms to be set, if any."

El Al also notes, "The state will make an effort to examine streamlining measures for operations of the aviation security system," and that "the parties may agree to extend the period of the agreement until December 31, 2034." In such a case, the amount of El Al's participation in security expenses will increase by an additional $1 million in 2032.

With the possibility of the state's approval for the distribution of a dividend in the company, El Al's stock has completed a jump of about 50% since the beginning of the year (and 336% over the past three years), giving a market cap of almost NIS 5.9 billion.

Published by Globes, Israel business news - en.globes.co.il - on March 3, 2025.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.

Dina Ben Tal Ganancia  credit: Guy Kushi & Yariv Fein
Dina Ben Tal Ganancia credit: Guy Kushi & Yariv Fein
groundcover founders credit: Yossi Yarom Israeli observability co groundcover raises $35m

groundcover has developed a “Bring Your Own Cloud” (BYOC) observability solution, redefining the architecture of a modern observability platform.

Tel Aviv Stock Exchange credit: Shutterstock MagioreStock Foreign investment in TASE hits five-year high

Foreign investors have been flocking to the Tel Aviv Stock Exchange in recent weeks, the TASE research department tells "Globes."

Elbit Systems tank turret systems credit: Elbit Systems Elbit Systems wins $100m tank turret systems deal

The Israel defense electronics company will supply its advanced UT30 MK2 unmanned turret systems to General Dynamics European Land Systems (GDELS) to be supplied to a NATO European country.

Tomer Weingarten Photo: PR Trump targets SentinelOne exec in act of revenge

The US administration has suspended the security clearance of the company's chef intelligence and public policy officer Chris Krebs and everyone associated with him.

Tel Aviv Stock Exchange share prices rising credit: Tali Bogdanovsky TASE opens sharply higher after Trump U-turn on tariffs

The pause is being interpreted as a climb down after US President Donald Trump admitted he had made the move to calm the markets.

Ashot Ashkelon credit: Ministry of Defense Up 250%, Ashot Ashkelon wins another Defense Ministry order

The Israeli defense company's share price has risen 250% in the past three years since FIMI Opportunity Funds acquired control.

Liad Agmon credit: Eyal Izhar Insight Partners Liad Agmon steps down as managing partner

Serial entrepreneur Agmon has served as a partner at Insight Partners Israel alongside Daniel Aronovitz who set up the Israel office.

Shekels credit: Shutterstock Vladerina32 Shekel slide resumes amid escalating tariff war

The Bank of Israel is not expected to intervene in the forex market despite the sharp depreciation of the shekel.

Nir Zuk credit: Inbal Marmari Palo Alto Networks mulls buying AI security co for $700m

Sources inform "Globes" that on Palo Alto's radar is Protect AI.

President Donald Trump hosts Prime Minister Benjamin Netanyahu credit: Reuters Kevin Mohatt Israeli officials confident on US tariff concessions

Senior Israeli figures believe that concessions could be tied to progress on strategic regional political issues that are important to President Trump.

Phoenix Investment House CEO Avner Hadad  credit: Tommy Harpaz "The market has priced in all the bad things"

Phoenix Investment House CEO Avner Hadad says US markets could continue to fall, but that we are close to interesting territory for patient investors.

Tel Aviv credit: Shutterstock Tel Aviv slips in World's Wealthiest Cities ranking

Tel Aviv's position as one of the world's wealthiest cities took a big knock over the past year as it slipped from 42nd to 48th in investment advisors Henley & Co.'s "World's Wealthiest Cities" Top 50 ranking.

Leviathan platform  credit: Albatross C'ttee seen recommending no cut in gas exports

The Dayan committee on the future of the gas sector estimates that Israel's natural gas reserves will run out in 2045.

Accountant General Yali Rothenberg credit: Rafi Kutz Israel's fiscal deficit continues to narrow

The deficit narrowed in the twelve months to the end of March 2025, for the sixth consecutive month, Ministry of Finance accountant general Yali Rothenberg reported today.

Arkia credit: Arkia Arkia cuts Tel Aviv - New York April fares

Arkia has cut fares at the last minute, a time when prices usually soar even higher, according to the pricing method used in the industry.

Bank of Israel Governor Prof. Amir Yaron credit: Dani Shem Tov Knesset Spokesperson BoI Governor: US tariffs could push up inflation in Israel

Prof. Amir Yaron tells "Globes" that there is a risk that the new tariffs will cause inflation to rise in the US, with a knock-on effect for Israel.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018