The Ministry of Finance has written to El Al Israel Airlines Ltd. (TASE: ELAL) CEO Gonen Usishkin requesting that he should reach agreement on rescheduling current payments. The request relates to rescheduling of loans granted to El Al within the framework of the streamlining program to which the airline is committed.
Ministry of Finance director general Shai Babad provided El Al with this letter in order for it to reach an arrangement with its foreign lender banks and with three international companies that lease aircraft to the company.
In his letter, Babad states to lenders and other parties to which El Al has financial commitments that the Ministry of Finance intends to approve a state guarantee for El Al for a loan of up to $400 million, subject to the other parties also playing their part.
As far as the Ministry of Finance is concerned, El Al will have to reach agreement with the banks. El Al is in talks with Israel Discount Bank (TASE: DSCT), Bank Leumi (TASE: LUMI) and Bank Hapoalim (TASE: POLI), and possibly with international banks.
According to a source at the Ministry of Finance, the state is not fearful of a scenario of a stay of proceedings that the airline will find itself in if the creditors attempt to collect their debts, or of a situation in which it will fail to reach agreement with its employees on the streamlining program, or fail to find a lender bank.
Meanwhile, talks between El Al's management and workers committee continue with the aim of reaching agreement on the streamlining plan that El Al will have to implement, which includes the sale of 10-15 aircraft out of its fleet of 45, a 30% reduction in activity involving the suspension of the opening of new routes, and layoffs of about one third of its 6,360 employees.
Discussions between El Al and the Ministry of Finance have been taking place for several weeks, but it looks as though a deadline is approaching. On May 14, El Al will release its financials, after twice receiving permission to postpone their release. The reports to be published will reveal the deep pit into which the airline has sunk.
Published by Globes, Israel business news - en.globes.co.il - on May 5, 2020
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