El Al, the Israeli flag carrier, suspended all its remaining passenger and cargo flights last week (read more here) and laid off cockpit and cabin crew that weren’t previously put on non-paid leave.
The State of Israel has decided to come to the rescue and guarantees a $250 million loan (75%), and the airline will issue $150 million worth of new shares (the government will buy all that won’t otherwise sell).
You can access El Al here.
Here’s an excerpt from the Jerusalem Post (access here):
The state will guarantee a $250 million loan and will purchase $150 million worth of stocks in the company, meaning it would control 61% of El Al. The process of releasing these new stocks for the state to buy them is expected to be completed by early October.
The goal is that, when the company is stable, an outside investor would purchase it. An unnamed Israeli citizen had already made inquires into the matter, Haaretz reported last week.
And here from the Times of Israel (access their piece here):
The deal stipulates efficiency steps that may lead to the firing of 2,000 workers.
The airline was privatized in 2004 and is currently controlled by Knafaim Holdings Ltd, which will see its shares diluted.
It put 80% of its 6,303 workers on unpaid leave, cut management salaries by 20%, halted investments, and signed accords for the sale and lease-back of three Boeing 737-800s.
It is complicated to run an airline if it is majority-owned by a government, although many have recently guaranteed loans, provided paid furlough schemes, or recapitalized them.
El Al is two billion in debt, and the outlook for the next few years for all airlines is extremely challenging. Perhaps this would have been an opportunity to renegotiate the debt obligations, too (not sure about the bankruptcy reorganization laws in Israel)?