El Al counting on gov't aid to beat virus crisis

El Al plane  / Photo: Yochai Mussi

Minister of Transport Bezalel Smotrich: If the state wants to preserve its civil aviation, it has to help.

"We welcome the minister of transport's initiative to assist Israeli airlines. We think that it is right, given the challenge at this time, which combines force majeure with state decisions affecting us," an El Al Israel Airlines Ltd. (TASE: ELAL) executive told "Globes" today.

The executive was referring to statements by Ministry of Transport Bezalel Smotrich on Israel Radio, who said, "The state will have to put its hand in its pocket and compensate the airlines… El Al is talking about losses of about $50 million. If the state wants to preserve its civil aviation, it has to help."

Smotrich added that he was talking to Minister of Finance Moshe Kahlon about compensation for Israeli airlines, which are suffering big losses. His spokesperson told "Globes" that El Al is not the only airline involved, and that he would start a dialogue with Prime Minister Benjamin Netanyahu on the matter. The grounds for the crisis are that it is a case of force majeure - events beyond the airlines' control.

Concern about the coronavirus has resulted in a halt in bookings and flight cancellations. Netanyahu also commented on the matter in an interview on Galei Tzahal (Army Radio), saying that the government would compensate the airlines for losses resulting from panic concerning the virus, which he attributed to force majeure.

El Al will need this support more than ever in the coming days, because the instruction by Minister of the Interior Aryeh Deri to bar the entry of foreigners who spent time in the last two weeks in Thailand, Hong Kong, Macau, or Singapore is making the situation in the sector worse. This instruction will prevent passengers who planned to visit Israel from these countries from doing so, and is likely to result in the closing down of Cathay Pacific's route from Hong Kong. The entry ban will be in force at all border crossings.

Entry of foreign residents from these places will officially begin on February 20, but such foreign residents are already being prevented from boarding flights to Israel. Population and Immigration Authority director general Prof. Shlomo Mor-Yosef explains that there are separate instructions for their presence in Israel.

El Al's problem, which it reported to the Tel Aviv Stock Exchange, is that the company is bound to comply with the Ministry of Health's instructions concerning the list of countries and the ban on entry of foreigners from them, which will reduce the number of passengers on its flights that it is still operating from East Asia. "These are decisions made by the state. They are making the situation worse with other countries, and are affecting us commercially. The importance of Israeli civil aviation to the Israeli economy and the ability to fly Israelis home in a crisis is critical. This crisis, which results from force majeure, mandates state support, and we thank the minister for his handling of the matter," the El Al executive said.

Published by Globes, Israel business news - en.globes.co.il - on February 18, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

El Al plane  / Photo: Yochai Mussi
El Al plane / Photo: Yochai Mussi
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