It is nearly a year since Eli Rozenberg, subsequently joined by his father Kenny Rozenberg, bought a controlling stake in El Al Israel Airlines Ltd. (TASE: ELAL) and as today's financial results for the second quarter of 2021 show, the losses are mounting.
The airline posted a net loss of $80 million for the second quarter of this year, which compares with a loss of $104 million in the second quarter of 2020. Revenue for the quarter was $222 million, up from $151 million in the corresponding quarter of 2020.
El Al has as market cap of NIS 563 million, 40% below the price that Rozenberg bought his 40% stake last September, meaning a loss of NIS 200 million. Nor does the immediate future hold out too much hope.
The airline's auditors kept the 'going concern' qualification attached to El Al's financial statement and warned that the Delta variant has caused a decline in demand, which has been expressed, among other things, in a fall in the sale of tickets for the continuation of the year and the worsening of the crisis has created a gap between previous assumptions by the company's management regarding the scale of the return to operations in 2022."
El Al already asked the Ministry of Finance to postpone the planned public offering of $105 million at the end of July, which the airline had initially committed to as part of the state aid package, as part of which Kenny Rozenberg will inject another $40 million into the company, on top of the $160 million he has already invested.
El Al received $210 million from the Israeli government for tickets for security staff over the next 20 years but is now seeking more money as CEO Avigal Soreq spelled out in today's financial statement, "The spread of the Covid-19 Delta variant obliges us to adapt our expenses to the scope of our business. In addition, we need a further aid package from the state, in the light of the new restrictions on our activity, like El Al's competitors, which are receiving subsidies from their governments, giving them an unfair competitive advantage."
Despite all the difficulties El Al CFO Itzik Eliav stressed the Rozenbergs unwavering support for the airline. He said, "So far the controlling owners have invested $160 million and they are committed to the company. It's a triangle that involves everyone. The state needs to come in. We laid off 1,900 people and have done many things.
Published by Globes, Israel business news - en.globes.co.il - on August 18, 2021
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