El Al reveals Q3 figures: $ 147m. losses, $ 125m. deficit, no progress on state loan
El Al released its third- quarter ( Q3) figures for 2020 on Thursday, revealing $ 147 million in losses, a $ 125m. deficit and a drop of 94% in earnings since July when it made $ 39m. For comparison, the airline made $ 647m. at the end of Q3 last year.
Departing El Al chief executive Gonen Usishkin pointed to the airline taking “many significant steps to reduce expenses and improve cash flow” but warned that without support from the government, the company will face “a threat to its existence.”
He is set to leave the role at the beginning of 2021, since El Al was recently purchased by 26- year- old yeshiva student Eli Rozenberg, TheMarker reported last month.
The purchase was approved despite Rozenberg having little previous experience in airline management and despite wide speculation that he is serving as a front for his father, Jewish- American businessman Kenny Rozenberg, who was not allowed to buy the airline since he is not an
Israeli citizen.
El Al vice president of finances Deganit Falti stressed that the airline is able to meet all of its “financial obligations to those who lent it funds,” but said that further state aid is “necessary to keep the company active.” Falti, too, will leave her position by the end of the year.
The airline is currently seeking further aid from the state to enable it to ask the banks for more loans or to sell
bonds to the tune of $ 400m., instead of its original request for $ 250m. worth. The state, which owns 14% of El Al stock, requested that the airline present it with evidence of how it will improve its efficiency, before discussions on further aid continue.
The banking sector isn’t comfortable with lending El Al money to keep it afloat unless the state steps in, and the state isn’t eager to do so before the airline presents it with a clear path to show a profit.
The airline reported on Wednesday that it had reduced its number of workers by 2,000 employees and that high- earning El Al employees accepted a pay cut. In 2019, Usishkin earned NIS 2m. for his services to the company.
El Al allegedly suffers from a very powerful pilots’ union, which previously objected to any cuts in pay or work conditions. It also enjoys the status of a national asset, as Israel cannot risk not having an airline. Transportation Minister Miri Regev publicly vowed to save El Al, but with COVID19 expected to impact the travel industry until 2024, it’s unclear what the state should do.
Last Wednesday, Norwegian Air Shuttle ASA filed for bankruptcy after Oslo refused to extend it a government loan.
The reasons given by the Norwegian government will sound similar to Israeli ears – the airline had financial difficulties even before the pandemic hit, and help should be offered to healthy businesses first.