El Al, managed by Gonen Ussishkin, has decided to extend the temporary cessation of regular passenger flights by June 20.
The decision was made after the Ministry of Health's guidelines last week extended the ban on foreigners entering Israel and extended the isolation duty for two weeks to those entering Israel. Another reason for extending the temporary halt of commercial passenger flights is the low demand.
El Al intends to continue to operate cargo flights from Israel to and including the use of passenger aircraft for this purpose, as well as operate limited flights as required. El Al's management is currently negotiating with the banks and the Treasury on the terms for obtaining a $ 400 million 82.5% state guarantee. At the same time, it is negotiating with the employee representative on the efficiency plan that will include laying off 2,000 employees and signing work agreements New collective with the goal of saving $ 400 million a year in company expenses.
At a meeting at the begining of the month between the company's management and senior executives, it was reported that progress had been made on various issues, including the number of employees being laid off, the reduction of the aircraft fleet and the capital injection from the owners. The talks will resume at noon and will also include representatives of Discount Bank management. The bank is expected to grant a loan to the EL AL on state guarantee if negotiations are successful.
Among other things, Wings Company, which owns El Al, was required to inject NIS 100 million by its controlling shareholder, but agreed to inject only NIS 38 million and the remaining amount was intended to raise in the capital markets. El Al's management met with senior Treasury officials last night. Relief so that agreements can be reached with the Treasury and prevent the publication of a live business note in its financial statements for 2020, after a two-week rejection.A live business note increases the risk of debt payment claims from banks and other creditors.
Regarding the required capital injection of NIS 100 million, which the controlling shareholder was asked to inject into the Company as a condition for receiving a state guarantee, Wings, which pledged to inject NIS 38 million capital into the Company, as part of the holding in EL AL, and the remaining amount (NIS 62 million). It intends to mobilize through the issue of public rights.
According to her, if she fails to raise the full amount from the public, then it will be completed by the underwriter who will acquire the full rights in the public place. The success of raising the full amount, as mentioned, is contingent upon asking whether you will succeed in raising a signed person accordingly.
It should be noted that so far from other company owners - Israir and Arkia - the state has not required the flow of owners as a condition of providing a loan guarantee.
According to El Al, she was surprised to discover the state's official requirements for a $ 400 million loan guarantee, including a new demand to reduce another $ 50 million in company expenses, capital injection by the owner and more.
El Al's representatives intend to seek to reduce $ 150 million in payments that the company is expected to repay in the coming year as the Treasury has demanded and ask foreign creditors to postpone it for the year. It will also offer El Al's mandatory postponement of payment to ticket buyers who claim it has billions of shekels.
It should be noted that El Al is not the first national company to face a crisis and has had to go bankrupt. Alitalia and Belgium's national company have already gone through similar procedures.
CEO of El Al Gonen Ussishkin urged Prime Minister Netanyahu to help the company.
Ussishkin warned that disbanding El Al will damage national security, the loss of livelihoods of some 10,000 households, and the loss of aircraft.
In his letter, Ussishkin said that late last night, he received a document in which the Treasury Department added additional unsustainable requirements, with the sole purpose of sending El Al to liquidation.
Finance officials did so after El Al presented a streamlining plan, under which everyone bears the burden - El Al employees, controlling shareholders who agreed to pledge the shares for state guarantee and inject capital into the company, Histadrut and business partners, to an unprecedented amount of over $ 1 billion each year, For a total of seven years and more than NIS 10 billion in aggregate for the term of the loan.
As Prime Minister, you have the ultimate responsibility that, after seventy-two years, El Al will end her shift, so we ask that you not make a decision without being given the opportunity to present to you the implications of the new Treasury requirements.
The immediate implications for the Israeli economy from the liquidation of El Al are:
A. Infringement of National Security - The State of Israel Gold Al share and the decision to disband El Al means loss of Israeli independence.
Israel will become an island under siege and a state subject to the extortion of foreign companies or foreign countries whose interests are inconsistent with that of the State of Israel.
B. Loss of livelihood - the meaning of the Treasury decision puts the danger of layoffs on the heads of some 10,000 households earning a living on direct and another 30,000 second-cycle households. In line with the Treasury requirements, a business plan has been prepared that ensures El Al will face the challenges of the day after Corona. We work with the Histadrut and the workers' representatives to find the right and fair solution to the situation in which the world of aviation is located, but the ever-changing finance requirements are by no means possible and we will not be able to deepen the cut for the fourth time, after all the business plan prepared by Toby Industry professionals and approved by the bank ensure that El Al is on a stable track that will allow the loan repayment.
third. The loss of aircraft - the aircraft owners will take them and the State of Israel will remain unable to fly independently - a real violation of national security.
D. Loss of public money - El Al has pledged in its business plan to fully repay the value of airline tickets to customers, amounting to over NIS 1 billion - if El Al reaches the liquidation process customers will lose all their money - the treasury is underestimating public money.
God. Damage to GDP - loss of NIS 2.5 billion every year.
and. Loss of strategic assets of the state.
As you probably know, EL AL is in a difficult situation like never before. Finance claims that El Al's difficulty and the need for a loan are related to its pre-crisis management are deprived of any foundation and have no grip on reality. From the date of privatization to the Corona crisis, El Al repaid all its debts and did not request a loan or financing from the state.
Mr. Prime Minister, the State of Israel closed the sky. The series of decisions made by the state led to the flights being stopped and this even before the virus arrived in Israel. By all accounts this is a state of supreme power. The magnitude of the crisis and its intensity have created a situation where no airline in the world can handle this crisis on its own, including the most lucrative "aviation lions". Many countries around the world have realized the importance of national aviation and have helped tens of billions of dollars in grants, grants, deferred tax payments and fees, and 90 percent state guarantees - and we expect the Israeli government to act similarly.
We ask that you instruct the Treasury Department to amend the outline presented by it last night and remove the inapplicable restrictions. The Treasury refuses to connect El Al to the ventilator as most countries in the world have done. The Treasury's recommendations produce a misrepresentation of "El Al Rescue" when it is actually a signature on El Al's death certificate.
Without an immediate decision, El Al will end its path and, as a result, the State of Israel will lose its current capacity in commercial aviation and its associated consequences, to the point of reaching a 'failing' situation, in times of crisis.
We did everything we could and met all the requirements of the banks. The business plan prepared includes painful and dramatic steps that will enable God to meet its obligations first and foremost to its customers, and pay off the loan it will be given.
Treasury requests repeatedly to revise the streamlining plan made the task impossible. Within a few weeks, the threshold was raised from $ 200 million a year to $ 400 million every year. The Treasury has, as it did in the last discussion, raised the level and this time to the level where the agreement with the Treasury requirements is a decision to dismantle the company and close it.
This is the time for urgent state decision Aviation security is part of national security!
El Al was established and co-founded with the state, she was a partner in immigration establishments, policy missions, operations. During times of crisis and moments of joy, El Al was there and provided assistance to every Israeli in need of help.
This is the time the country is here for us, any other decision will be a cry for generations on your watch.
Prime Minister Netanyahu is expected to meet at noon with officials in the Finance Ministry to discuss El Al, a meeting that could doom the company's decision.