El Al Seeks Fresh Bailout as Delta Variant Dims Recovery Hopes

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

Things were looking better for the financially beleaguered El Al Airlines earlier this year after a state loan was secured and travel bans were lifted. Then the Delta variant hit, and flight bookings plummeted.

CEO Avigal Soreq said in a financial statement on Wednesday: “The spread of the Covid-19 Delta variant obliges us to adapt our expenses to the scope of our business. In addition, we need a further aid package from the state, in the light of the new restrictions on our activity, like El Al’s competitors, which are receiving subsidies from their governments, giving them an unfair competitive advantage,” Globes reported.

El Al received $210 million from the Israeli government for tickets for security staff over the next 20 years but is now seeking an additional cash injection,

The airline posted a net loss of $80 million for the second quarter of this year, which compares with a loss of $104 million in the second quarter of 2020. Revenue for the quarter was $222 million, up from $151 million in the corresponding quarter of 2020.

El Al has a market cap of NIS 563 million, 40% below the price at which Eli Rozenberg bought his 40% stake last September, which translates into a loss of NIS 200 million.

The airline’s auditors kept the ‘going concern’ qualification attached to El Al’s financial statement and warned that “the Delta variant has caused a decline in demand, which has been expressed, among other things, in a fall in the sale of tickets for the continuation of the year and the worsening of the crisis has created a gap between previous assumptions by the company’s management regarding the scale of the return to operations in 2022.”

Nevertheless, the country’s flagship carrier cannot be counted out. Despite the bad news, El Al CFO Itzik Eliav stressed the owners’ unwavering support for the airline. He said, “So far the controlling owners have invested $160 million and they are committed to the company. It’s a triangle that involves everyone. The state needs to come in. We laid off 1,900 people and have done many things.”