El Al has stopped flying. The company has cancelled two passenger flights and four cargo flights scheduled for today.
Sources inform "Globes" that El Al CEO Gonen Usishkin has ordered that all the company's aircraft should be flown back to Israel, including those on cargo rounds (such as a flight that took off to Milan yesterday, and from there to London to pick up cargo), with the aim of halting activity entirely. It appears that the airline does not plan to operate cargo flights and special passenger flights to particular destinations. The company has already announced that scheduled passenger flights will be halted until July 31.
The cargo business has in any case been diminishing, as foreign airlines restore flights to Tel Aviv. Customers prefer sending cargo in the holds of passenger aircraft, the possibilities for which have now expanded. This has reduced cargo prices.
Yesterday evening, El Al reported a $140 million loss for the first quarter. It seeks a $400 million cash injection, and has been conducting negotiations on two possible formats: receiving the entire sum as a loan mostly backed by a state guarantee, or a state guaranteed loan of $250 million and an equity offering of $150 million, also with state backing.
Minister of Finance Israel Katz and Prime Minister Benjamin Netanyahu instructed Ministry of Finance officials a while ago to help the company and not to let it collapse. Is halting flights meant to exert pressure on the state to provide the aid El Al needs in order to survive? It is a consequence of flights not being manned by pilots as part of the battle between them and the company? Yesterday, the new chairman of the pilots committee, Captain Nir Reuveni,, accused the airline's management of being incapable of reaching agreements with the employees, of having refuse a generous offer from the Ministry of Finance, and of being incapable of leading the company at this time.
Most of the pilots, like most of the rest of El Al's employees, 5,800 out of 6,300, are currently on leave without pay. Only 110 of the airline's 650 pilots are currently working.
El Al said in response to the pilots' accusations that it was determined o do everything to meet the government's demands in order to receive the aid and to prepare for a gradual return to normal activity. "To that end, responsibility and leadership are required from all concerned: the Histadrut (General Federation of Labor in Israel), the management, and the employees' representatives," the company's statement said.
"The company is not in a good position," says Avi Edri, chairperson of the transport workers union at the Histadrut. "The company cannot continue to hemorrhage, and if it came to the conclusion that it was preferable for it to cease flying, that means that it is losing on the flights that it is operating. The company has an obligation to minimize damage to itself, and as part of that, to its employees. So on the one hand it's tough to see activity being reduced, but on the other, if the airline is losing money, it's better to halt activity and wait for better times. "
Edri said that El Al could be expected to receive a loan, and that if it did, it would pay its debts to the public and to suppliers. "The main factor is the skies being opened to green destinations. As long as that doesn't happen, the situation of the Israeli airlines will continue to be difficult." The debts Edri mentions include refunds amounting to $350 million owed to passengers whose flights were cancelled as a consequence of the coronavirus outbreak.
Published by Globes, Israel business news - en.globes.co.il - on July 1, 2020
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