El Al Denies Reports It Rejected Bailout Plan

El Al Airlines planes are seen on the tarmac at Ben Gurion airport. (Reuters/Ronen Zvulun)

El Al on Friday denied media reports that it had rejected the Finance Ministry’s latest bailout proposal, stating that it had only “suggested adjustments” to the revised plan. According to a proposal received by El Al management earlier this month, the government is willing to offer a $250 million loan to the flag carrier.

In addition, El Al would issue shares worth $150 million, backed by a government guarantee to purchase shares that are left unsold. The agreement ultimately could see the state acquiring approximately 60% of the company’s shares and becoming the majority shareholder.

On Thursday, it was reported that El Al had agreed terms with a financial institution to provide a previously-discussed $400 million loan, while issuing a more modest number of shares that would not lead to its temporary renationalization.

The airline added that it intends to continue discussions with the Finance Ministry to receive state support, while again cautioning that “there is no certainty that one plan or another will be agreed, or that the conditions attached will be possible to achieve.”

The revised rescue plan is conditional upon severe cost-cutting measures and layoffs expected to affect one-third of the airline’s 6,500-strong workforce, and will also require the approval of an Israeli bank, the El Al workers union, the government and the Knesset Finance Committee.

On Wednesday, El Al said it would extend its halt on all scheduled passenger flights to and from Israel until July 31, with the exception of cargo flights and one-off services. The previous date announced by El Al earlier this month was June 30.

Some 6,000 of the carrier’s 6,500 staff are also scheduled to remain on unpaid leave until July 31.