While airlines across the globe received truly massive bailouts with few strings attached, the Israeli government hasn’t offered that kind of assistance to their flag carrier.
The government hoped that El Al would be able to get a $300 million loan, the bulk of which would be used to pay back passengers with cancelled tickets that have yet to be refunded. However despite the government offering an 82.5% guarantee of the loan, Israeli banks wanted a usurious interest rate that the government wouldn’t agree to.
Instead, Israel will prepay for $210 million of flight tickets good for the next 20 years to cover airline security personnel that is paid for by the state.
A similar deal will be offered to Israeli carriers Israir and Arkia.
In order to complete the deal, El Al will raise another $105 million in capital, with controlling shareholder Eli Rozenberg investing at least $43 million in a 3rd round of funding that will bring his total funding to over $200 million. The 27 year old yeshiva student halted El Al subsidiary Sun D’or from offering flight on Shabbos and hopes to transform the carrier’s subpar reputation.
El Al will also shrink their workforce by a third in order to achieve further cost savings and become a more efficient airline.
Hopefully people with outstanding cancelled tickets will get their refunds soon!