Israel's Ministry of Finance has published details about its $85 million aid package for Israel's three airlines, to help them get through the Covid crisis. El Al, Arkia and Israir will receive the aid in proportion to their relative sizes.
Under the plan, the Ministry of Finance will invest the money in interest-free convertible bonds for each of the airlines, for a period of three years. El Al will receive the lion's share of the $85 million, with Arkia and Israir receiving similar amounts, even though Israir has a larger fleet and carries more passengers.
The financial aid to be given has been increased by $41 million from the $44 million approved last November, of which $30 million was earmarked for El Al and $7 million each for Israir and Arkia.
At the time, El Al agreed to the state aid package, which required controlled shareholder Kenny Rozenberg to inject the same amount into the airline but there was no commitment from the controlling shareholders of Arkia and Israir to do the same. The ratio of the commitment has now been altered, with the controlling shareholders required to inject $2 for every $3 that the state grants.
The agreement also stipulates that the state's stake in any of the three airlines will not go above 24%. The state currently holds 13.3% control of El Al, although it makes no decisions about management or policy.
The state is also offering to pay the three airlines an overall sum of $15 million for surplus fuel, maintenance and security systems expenses for the next 20 years.
Since the start of the Covid crisis, the state transferred $210 million to El Al for security staff tickets and other expenses over the next 20 years, with the controlling shareholder agreeing to inject half that amount into the airline. Israir received $16 million in a similar arrangement.
Published by Globes, Israel business news - en.globes.co.il - on January 16, 2022.
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