As it continues talks to obtain a USD300 million loan from Bank Leumi, Israel Discount Bank, and other financial bodies, armed with an 82.5% state guarantee, El Al Israel Airlines (LY, Tel Aviv Ben Gurion) has begun to implement one of the conditions of that rescue plan - to streamline its workforce, local media have reported.
The layoffs would go into effect only after receiving confirmation of the state-backed loan, although even after that, unions reserve the right to swap up to 15% of the people on the list of intended layoffs.
The redundancies would affect 1,600 staff, both temporary and permanent, and in all the airline’s departments. The first of these employees began to be notified this week by human resources to attend hearings on the issue.
Among those to leave are 71 of the carrier’s 638 pilots, in addition to 32 pilots who were laid off in 2020 and 40 others who departed voluntarily.
Sharon Ben-Yitzhak, chairman of the El Al Workers’ Union, told the financial daily Globes that those who will be made redundant will be given beneficial retirement terms according to age and seniority.
The airline recently extended unpaid leave for 5,245 - the vast majority - of its employees until March 31.
El Al is in “advanced” talks for the loan, which would be repaid with 5% interest over five years, the newspaper Haaretz reported. Sources said that the banks will try to add an Israeli insurance company to the mix, Migdal Insurance and Financial Holdings.
The talks made progress last week when El Al succeeded in raising ILS250 million shekels (USD76.3 million) in an options sale. Kanfei Nesharim, the holding company in which controlling shareholder Eli Rosenberg owns the airline, provided USD50 million of that amount.
“El Al is starting to implement the company’s recovery plan after the coronavirus,” El Al said in a statement. “Some of the plan, including downsizing, will be done sensitively and respectfully, in partnership with the Histradrut labour federation and in accordance with signed labour agreements. El Al management is also in a process of growth and renewal during which managers are changing.”
An exodus of executives continued from the company in recent days, to include internal auditor Gil Bar; Lior Tanner, CEO of the El Al Matmid Frequent Flyer Club; MRO VP Yossi Barazani; and client services VP Amir Rogovsky.
