Israel has released further details about its USD85 million package of additional aid for the country’s three scheduled passenger carriers, after the cabinet approved the funds on January 16. El Al Israel Airlines, Arkia Israeli Airlines, and Israir will receive the aid in proportion to their relative sizes, the ministries of finance and transportation outlined in a statement.

The finance ministry will invest the money in the form of three-year zero-interest convertible bonds. The sum of USD85 million represents an increase of USD41 million compared to a similar USD44 million package approved in November.

El Al will receive the lion’s share of the total, while leisure-focussed Israir and Arkia will be able to obtain smaller but similar amounts to each other even though Israir has a slightly larger fleet and carries more passengers. According to the ch-aviation fleets advanced module, El Al currently operates 45 aircraft, Israir eight, and Arkia six.

Of the USD44 million approved two months ago, the proportions were aligned so that USD30 million was earmarked for El Al and USD7 million each for the other two airlines. At the time, the flag carrier agreed to the package, which required controlling shareholder Kenny Rosenberg to inject the same amount, but no commitment emerged from Arkia and Israir to do the same.

The ratio of commitment has now changed, so that “the state will offer a lighter participation rate, from a ratio of 1:1 in November to a ratio of 3:2. For every USD3 from the state, the shareholders must follow through with USD3,” the statement explained.

The state has stressed that its stake in any of the three airlines as a possible consequence of the package will not exceed 24%. It currently holds a 13.3% shareholding in El Al but makes no decisions about management or policy.

“The spread of the Omicron variant around the world and in Israel has led to a significant drop in the operations of Israeli airlines,” the statement said. “Against this background, in recent weeks the ministries of finance and transportation have been working intensively to formulate an additional outline of assistance to enable the companies to survive the crisis.”

“The other conditions approved in the November outline with regard to convertible debentures will remain in force. In addition, the state is offering a 20-year advance payment for excess fuel expenses and maintenance related to the Sky Shield system, totalling USD15 million for all airlines,” it concluded, referring to the Sky Shield airborne jammer system providing protection against enemy threats.

Neither Arkia nor Israir have commented on the package, but El Al said in an update to the stock exchange on January 17 that it “was informed by the Ministry of Finance that a government decision was approved on January 16, 2022, on additional assistance to Israeli airlines following the outbreak of the Omicron variant.”

It added that it was in advanced negotiations with the ministry to complete the agreement, the signing of which “is subject to the approvals of the controlling shareholder and competent bodies in the company, which are expected to be received in the coming days. As of the date of this report, there is no certainty that the required approvals will be obtained.”