Finance Ministry Agrees to Terms of El Al Rescue Package

The Ministry of Finance has agreed to the terms of a loan for El Al Airlines that will keep the nation’s flagship carrier flying, Globes reported on Wednesday night.

The announcement is the culmination of months of negotiations between the ministry, the airlines and the banks to secure the financial package that will enable the airline to survive the devastating effects of bans on international travel due to the Covid pandemic.

The Ministry of Finance will transfer $210 million as an advance to the airline for security services in the coming years.

In addition, El Al has committed to raise another $105 million through a public offering with controlling shareholder Eli Rozenberg committed to buying at least $43 million of the shares. El Al has also agreed to implement its streamlining plan, which will result in savings of $400 million in the coming years.

That plan will entail laying off 2,000 employees, nearly one third of its total work force.

El Al must also pay suppliers and refund customers, many of whom have yet to receive back money paid for cancelled flights over the past year due to the Covid crisis.

Bank Leumi and Bank Discount will provide the $300 million loan with an 82.5% state guarantee. The Ministry of Finance did not agree to the interest rate terms that the banks insisted on charging El Al.