Histadrut and the Business Sector demand P.M Netanyahu with a state guarantee for a loan to El Al

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by Ifi Reporter Category:Financial Apr 7, 2020

Histadrut Chairman Arnon Ben David and Chairman of the Business Sector Dubi Amitai urgently approached Prime Minister Netanyahu with a demand for a state guarantee and a loan to El Al, just before the company announces cessation of activity following its financial situation. The letter comes a day after he asked the stock exchange to announce that Treasury officials told the company orally that the requested aid package would not be approved at this time. El Al noted that "the professional team stated that it is within the authority of the political echelon to make a different decision."
In a letter to the Prime Minister, "Reality in the present has proven to us repeatedly that aviation independence is essential for the state's ability to care for its citizens. El Al is a first strategic asset and its refusal to guarantee a state guarantee for its existence, outrageous and difficult questions. Most developed countries have already provided assistance to companies. Tens of billions of dollars in dollars. The United States, Singapore, Denmark, Sweden, Norway, Australia, New Zealand and other countries have internalized that ensuring the resilience of national and domestic airlines is not only a more economically viable decision but is also needed to maintain national security. " .
The two noted that "without an airline like El Al, the State of Israel risks becoming a besieged island in times of crisis. The state must not agree to a situation where Israeli citizens are subject to the mercy of both states and foreign companies, which preclude interests that are not always in line with Israel's interests.
"Don't let God crash your shift! The elimination of God is neglecting all the values ​​established by the state, and citizens will pay a dear price. The direct result of your silence could rise, already in the immediate range, to ten thousand laid off, with a loss of income to some 30,000 households. In the second cycle and a loss of NIS 2.5 billion in GDP In the meantime, the strong state of Israel will lose its basic ability to extricate Israelis around the world, in times of crisis or emergency. On behalf of millions of Israelis, workers and business owners - women and men who build this country, we call upon your immediate intervention to ensure the continued existence of El Al. Without granting a State guarantee loan, do not collapse while you have all the means to save. "

The Ministry of Finance rejected yesterday El Al's aid request. The team, led by Treasury Director General Shai Babad, Accountant General Roni Hezekiah, head of the Budget Department at Treasury Shaul Meridor and representatives of the tax authority, announced that the firm would not guarantee $ 250 million in loan requests from Discount Bank.
The team also announced that the firm would not provide additional $ 150 million in guarantees to banks and aircraft leasing companies on principal, interest and lease payments, as well as additional payments, such as refunds to flight ticket purchasers canceled.
Following the team decision, the decision will be passed with the approval of Prime Minister Benjamin Netanyahu, and if adopted, El Al's entry into the process of liquidation will be almost inevitable. The explosion in negotiations occurred after the Treasury refused to commit to Discount Bank's request to increase the bank's guarantee, in the event that the bleeding period - that is, the period in which the company flights are disabled - is extended, and the recovery period - the gradual return to flights - will not begin at the end of June.
The staff's decision was reached at the end of a month of discussions, which, as part of them, submitted to the streamlining plan prepared in collaboration with BDO, with the aim of reducing the company's operating expenses by $ 200 million per year. The goal is to ask if you can repay the additional loans that will go beyond the existing $ 1.8 billion in loans and leasing fees.
The plan was prepared at the Ministry of Finance's request, based on preparations for three periods: a bleeding period, during which the company is almost completely disabled and is required to continue to absorb its fixed expenses; The recovery period, which will begin according to Treasury forecasts, July 2020; And a period of growth, in which El Al will reach occupancy and activity rates that characterized it before the Corona crisis.
El Al provided the Treasury with a plan based on reducing the company's salary expenses by $ 150 million a year and another $ 50 million a year in other expenses and approved by BDO. The cut in salary expenses was planned to be carried out through the dismissal of 1,500 employees of the company, including 550 permanent employees and the change of collective labor agreements in the company so that its operations can be streamlined. This plan was unacceptable to the company's employee committee, which opposed the number of employees being laid off, demanded increased severance pay and opposed the change in the collective labor agreements at the company.
El Al's inability to present a united front with its employees has hampered the company's chances of receiving the required assistance package. However, the team seems to think it better to reorganize El Al after a liquidation process, although company executives have made it clear that such a process involves the realization of liens on 16 aircraft and the loss of the company's other assets such as landing rights at major airports.
It is estimated that the company's cash fund will pay the salaries of March, but it is doubtful that it will be able to fund the salaries of the company's 300 employees who are still working there, after 6,200 employees were taken on vacation without pay and the company's cash-burning rate dropped from $ 100 million to $ 40 million. El Al is scheduled to repay principal and interest payments by 2020 and pay a $ 320 million lease on 16 Dreamliner aircraft it has purchased and leased.

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