El Al Sued $400 Million for Dodging Refunds

The financially beleaguered El Al Airlines now faces a $400 million class action suit filed by passengers demanding refunds on cancelled flights, Globes said on Tuesday.

The company holds an estimated 1.5 billion shekels worth of payment for bookings that were cancelled since the coronavirus outbreak in March. Currently, El Al has grounded all of its flights, and the refund issue is expected to grow worse as August 1 is the earliest date for partial resumption of flights.

The amount sought by the passengers is equal to the reported amount of El Al’s government bailout.

El Al notified the Tel Aviv Stock Exchange (TASE) about the law suit, noting that it is also being sued for not informing passengers that they are entitled to the refunds. El Al said, “We will study the suit and file a response as required.”

The company pointed out, however, that the Aviation Law was amended on Monday, granting airlines an extension until August 31, during which time they do not have to refund canceled flights. Instead, they can offer passengers credit toward a replacement booking.

Lawyers for the passengers cited El Al’s “contemptible” treatment of passengers seeking refunds. Hundreds of the complainants said they could only get a recording which said: “Following the coronavirus outbreak our offices are currently closed and work is being conducted on an emergency footing. Please keep any tickets at this stage for future use.” The recording added that they ticket could be used, “following the return of scheduled operations.”

Lawyer Oded Steiff argued that El Al cannot hide behind its financial difficulties, and that it has means at its disposal to compensate the passengers:

“El Al needs to understand the importance of this. Its coffers are not empty…The more it conducts a dialogue with passengers, at a conservative estimate, it will pay out less cash. El Al needs to make people stay loyal even though they have received a slap and so far it has failed the test of initiating a response.”

Regarding the company’s pleas for more generous state assistance based on its status as an important national asset, Steiff said:

“If El Al takes its customers for granted, then it is a company with no right to exist and if there will be a ruling instructing it to pay, then it will have to cope with this. I hope that whoever buys it, pays better attention to its customers.”