Bank Hapoalim (TASE: POLI) is in talks to buy a 30% stake in the Matmid Frequent Flyer Club of El Al Israel Airlines Ltd. (TASE:ELAL), sources close to the matter have told "Globes." The negotiations follow demands by the Ministry of Finance that El Al sell a 30% stake in its loyalty club as part of the company's rescue package.
The Matmid Frequent Flyer Club is valued at $250 million, down from $300 million, before the Covid pandemic. When El Al had been negotiating last year with the banks for loans, which it eventually did not take, the frequent flyers club had been offered as collateral.
The talks with Bank Hapoalim are with the involvement of the Ministry of Finance. The aim of Bank Hapoalim is to combiner the activities of the Frequent Flyer Club, El Al's most profitable activity, with its payments app Bit, so that users, maybe the younger customers, can accumulate points.
El Al's Frequent Flyer Club has 2.1 million members, of which 350,000 hold the FlyCard credit card. The club yields profits of $20-25 million annually and the annual expenditure by FlyCard cardholders is an estimated $30 billion.
In late 2018, El Al chose to continue operating FlyCard through the CAL credit card company after a protracted struggle in which LeumiCard had hoped to win over the highly coveted credit card. The agreement between El Al and CAL, giving it sole rights to issue FlyCard, is valid until 2029. As part of the agreement, El Al received a NIS 125 million signing on fee and enjoys a continued flow of royalties and revenue from foreign exchange conversion.
Bank Hapoalim said, "We do not comment on matters related to business neogtiations.
El Al declined to comment.
Published by Globes, Israel business news - en.globes.co.il - on October 13, 2021
Copyright of Globes Publisher Itonut (1983) Ltd. 2021