El Al Israel Airlines Ltd. (TASE: ELAL) workers held an emergency meeting today following the announcement by the airline's management of its intention to lay off 1,000 workers immediately because of the coronavirus crisis. El Al has 6,300 employees.
While the meeting was taking place, Prime Minister Benjamin Netanyahu called the El Al workers' committee chairman Shlomo Ben Yitzhak and told him that he had instructed the ministerial committee to help El Al and the other Israeli airlines. Netanyahu said, "I appreciate the work that you are doing, and we'll help you and take care of El Al."
El Al workers demonstrate: Our home is in danger
Dressed in black shirts bearing the motto, "Help!", thousands of El Al workers demonstrated today behind slogans saying, "Our home is in danger,", "Aviation needs a cure," "Workers are saving their home." The workers did not condemn El Al's management; they called on the state to aid El Al and Israeli civil aviation.
Minister of Transport Bezalel Smotrich, backed by Netanyahu, said that the government should aid Israeli civil aviation, which has been severely damaged by the halting of flights to China, Hong Kong, Thailand, and even Italy. At the same time, El Al faces the cancelation of bookings for the Passover vacation and the summer holidays. El Al is also being challenged by the need to pay for its new Dreamliners, and by competition in the sector.
The recommendation by the Ministry of Health to completely avoid overseas travel, and to refrain from participating in conferences, has severely aggravated El Al's crisis. El Al believes that state aid is necessary because of three factors: the golden share that the state holds in El Al (and also in Israel Chemicals and Zim Integrated Shipping Services), which makes El Al a strategic asset; the crisis due to force majeure; and the fact that the state itself made the crisis worse by recommending that people not fly overseas at all.
El Al says that state aid can be in the form of a financial injection, but should already be given through the $100 million a year in taxes that El Al pays to the state.
El Al has yet to submit a compensation plan, or to state how much it needs. The company is counting on the formation of a committee to investigate and determine the amount of compensation. Netanyahu has authorized Minister of Economy and Industry Eli Cohen to do this.
El Al stated, "The state took decisions that immediately affected El Al. These decisions were unique to Israel. Combined with the facts that the company is a strategic asset and that the crisis is due to force majeure, this requires state intervention."
The damage is increasing daily. El Al, which reported a $70 million loss from the coronavirus crisis to the Tel Aviv Stock Exchange last Thursday, did not take into account the halt in flights to Italy, which preceded the Ministry of Health's recommendation to reconsider any overseas flights at all. The extent of the damage reported by El Al is therefore already dramatically greater.
El Al expects tit for tat. The company helped the state fly aid teams to countries in which earthquakes occurred, such as Brazil. It now expects a hand from the state, and El Al says it has to be immediate.
El Al is also seeking to solve problems putting it in an inferior position vis-à-vis its competitor: the fact that it is not allowed to fly to Turkey for security reasons, the fact that foreign airlines are allowed to shorten their routes by flying through Saudi Arabian airspace (Air India), and the regulations allowing state employees to fly on foreign airlines, instead of exclusively on El Al.
El Al will be unable to avoid laying off workers now. In a sense, the current crisis is likely to enable the company to do what it wanted to do previously. The number of layoffs may not amount to 1,000 of the company's current 6,300 workers, as El Al CEO Gonen Usishkin says he wants, but El Al's recovery plan will have to include a cut in staff, and a cutback in benefits for the workers remaining in the airline. El Al's management will also have to bear part of the burden if the matter is put on the agenda.
"6,500 workers shouting for help from the government"
Ben-Yitzhak told the workers at today's emergency meeting, "We are now in a crisis that we have never experienced before. In the past three months, the workers' representatives have been negotiating on behalf of all of the company's workers. The representatives made legitimate demands to improve our welfare and salary terms, and we hired the services of Prof. Yaron Zelekha for this purpose. This accursed virus began to undermine us in the middle of these negotiations."
Ben-Yitzhak mentioned that El Al had begun as a government company, "and one bright day, it was decided to privatize El Al and send it to compete on the free market as a public company. When other countries preserve a national carrier, however, they encourage, subsidize, and support it, and that is in countries having trans-border bridges and railways. In Israel, it was decided to challenge the national carrier time after time. We have to cope with encouragement for foreign airlines that benefit from aviation alliances, while as an Israeli airline, we are boycotted because we are Jews. We suffer from a lack of slots, which foreign airlines here take our citizens to destinations around the world."
Ben-Yitzhak cited the security fee that El Al has to pay and what he described as the unfair conditions in the open skies policy. He said, "As an Israeli company that flies a large proportion of the passengers at Ben Gurion Airport, we should have received a discount on fees - this was also taken from us. They allow our competitors to fly over Saudi Arabia, which shortens the flight time by two hours, and we are not allowed to do it. Now the coronavirus has come. In contrast to all other countries, the government has imposed crazy restrictions on flights - this is a death blow to aviation. As an airline that constantly faces inequality in competition and is supposed to preserve Israel's civil aviation and military strategic asset, how can we stand passengers being prevented from flying?"
Ben-Yitzhak referred to the character of the discussions with El Al's management, saying, "We have been finding a receptive ear from ministers and decision-makers in recent weeks. Today, we are calling out and asking the government: we are the state's soldiers. There are pilots, technicians, mechanics, and electricians responsible for keeping our warplanes in the air. We are all citizens driving the Israeli economy. We perform every mission at any time, and we will continue doing this in the future. This shout is to the Israeli government is from 6,500 households in Israel: take back El Al, in which you still have a golden share."
Histadrut chairman: I'll tell all the workers' committees to fly only on Israeli airlines
"We're in an emergency situation. All of the authorities must lend a hand to prevent the collapse of El Al and the other Israeli airlines. I'll instruct all of the workers' committees to fly only on Israeli airlines from now on," said Histradrut (General Federation of Labor in Israel) chairman Arnon Bar-David at a protest conference of El Al workers at Ben Gurion Airport.
"El Al, the company that Israelis, the workers, and the Histradrut love so much, faces collapse, and no one cares. It is impossible to imagine the state of civil aviation in Israel without it. When there's an emergency, it should be treated as one. We expect all of the authorities in Israel to help El Al, and to prevent its collapse and that of the other Israeli airlines, Israir and Arkia. I'll instruct all of the workers' committees to fly only on Israeli airlines from now on - this is the time to show cohesion and unity," Bar-David said.
He added that he expected the government "to inject an initial amount into the company, so that it can get through this period. Everyone has to help in this matter - to act, not just talk. Decisions have to be taken, not to appoint another committee."
Published by Globes, Israel business news - en.globes.co.il - on March 1, 2020
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