El Al Israel Airlines (LY, Tel Aviv Ben Gurion) has reached agreement with Israel’s Ministry of Finance for the state to provide more aid, around USD50 million, to the privately held carrier as the pandemic continues to impact travel, while controlling shareholder Kenny Rosenberg will also inject further capital.
The plan, which the ministry said had been agreed “after intensive negotiations over the last few weeks,” will be subject to government approval, and the precise figures will be finalised in the coming days. Rosenberg has so far injected ILS830 million shekels (USD268 million) into the company, including the acquisition of control in September 2020.
“The parties have reached an understanding in principle on an additional aid plan against the background of the crisis caused by the Omicron variant. The outline will include an inflow of tens of millions of dollars in the coming period to come from the controlling shareholders of the company and the state, to allow the company to make it through the crisis in the coming months,” a ministry statement said.
“At the same time, the state also maintains contacts with other Israeli airlines, which will be offered an outline with the same principles on the basis of equal criteria,” it added referring to Arkia Israeli Airlines (IZ, Tel Aviv Ben Gurion) and Israir (6H, Tel Aviv Ben Gurion).
Finance Minister Avigdor Lieberman emphasised in the statement that “the best assistance the state can provide to airlines is to allow them to fly with minimum restrictions and I hope that in the coming month we will open the skies to arrivals and departures.”
On January 3, four days after the statement, the Israeli government announced that vaccinated foreign nationals from most countries would be able to enter the country from Sunday, January 9. This does not apply to people from countries classified as “red” - currently the US, the UK, Canada, France, the UAE, Ethiopia, South Africa, Hungary, Tanzania, Nigeria, Spain, Portugal, Switzerland, and Turkey.
However, Canada, France, Hungary, Nigeria, Portugal, South Africa, and Spain are likely to soon be removed from the red list.
The new round of support will be in the form of zero-interest loans, and, as before, the state will receive five-to-seven-year bonds convertible into shares. The state will continue to cap its stake in El Al to 24%, and in any event will not have voting rights, the Hebrew-language financial dailies Globes and The Marker reported. It currently holds a 13% shareholding in the flag carrier.
