El Al is preparing to lay off about a third of its employees

El Al is preparing to lay off about a third of its employees. The company's human resources department will inform employees who are candidates for dismissal on Monday about the intention to fire them.
According to the employment agreement signed in July 2020 with the four employee sectors at El Al, the entry into force of the dismissal process is conditional on receiving a state-guaranteed bank loan, and even then the workers' committees reserve the right to replace 15% of employees on the dismissal list.
El Al is in advanced talks with a group led by Leumi and Discount Banks on a $ 300 million five-year loan at an interest rate of 5% and a state guarantee of 82.5%, so that the effective interest rate that the banks will benefit from will be 28.5%. According to estimates, Leumi and Discount will try to add the Migdal insurance company (+ 0.69% 379.6) to the group of lenders. Contacts progressed after he asked for completion last week of an IPO in which it raised $ 77 million in an options IPO, with Eagles Wings - which controls El Al - injecting $ 50 million from the amount.
The loan is intended, among other things, to repay money to flight ticket buyers whose flight has been canceled. It is estimated that the loan balance has decreased by 50% since the publication of the financial statements for the third quarter of 2020 - then it was $ 240 million. Upon receiving the loan, EL AL will also begin the process of repaying its debts to suppliers such as hotels.