El Al has adopted even more drastic measures amid the coronavirus outbreak in order to maintain its profitability. 80% of El Al’s staff will go on unpaid leave starting next week and until further notice. The announcement has raised questions over the carrier’s future.
80% of El Al staff take mandatory leave
A lot has changed in the past few months for Israeli air carrier El Al. The airline has been severely hit by the evolution of the coronavirus transmission. The latest developments have now caused El Al to rethink its operational strategy.
At the start of this month, less than two weeks ago, El Al said that it was thinking about putting 1,000 employees on unpaid leave due to the coronavirus. This strategy was aimed at mitigating financial turmoil as the airline was forced to cut flights. At the time, El Al had flight restrictions set up in some parts of Italy, Beijing, Hong Kong, Bangkok, and Tokyo.
Fast forward a few days and the situation looks a lot bleaker. El Al has now advised its staff via an internal memo that 80% will go on unpaid leave. The airline will remove 4,000 employees next week leaving just a handful of staff members and between 50-120 pilots.
Other airlines have enforced mandatory pay cuts for their staff which, whilst drastic, cannot be compared to staff completely losing their jobs for an undefined period of time. So why did El Al feel the need to cut so many staff from its operation?
What’s the reason for this drastic action?
El Al now forecasts that its losses from the coronavirus outbreak will be significantly more than previously thought. Nearly one month ago, the airline expected a $50 million loss due to developments with the coronavirus. That figure has now more than doubled. The airline expects that, between January and April, it will have incurred losses amounting to at least $140 million.
Although the airline will continue to operate some routes, the majority of its services will also be suspended. In order to maintain what remains of its operation, cutting staff was essential.
Speaking to The Jerusalem Post, the CEO of El Al Mr. Gonen Usishkin said:
“El Al sees a supreme value in maintaining the air routes to and from Israel during the time of emergency, and will therefore continue to operate flights to America, Europe and Africa, according to demand and need.”
However, in the current climate, it looks like demand for flights will continue to decline, forcing El Al to suspend even more of its services.
Travelers are canceling plans
The future of El Al’s operation depends on the number of passengers that continue to use its service. It relies on passengers making international trips to keep itself financially afloat. However, government regulation is making that increasingly more difficult.
The Ministry of Health in Israel has recently imposed a self-isolation rule for any travelers arriving in Israel. Those arriving in the country from overseas must quarantine themselves for a period of 14 days. A two week holiday to Israel now looks a lot less appealing if the entirety of the trip needs to be spent in solitary confinement.
As such, the regulation has been hampering the Israeli tourism industry, adding to what was already a reduced travel demand. As more cases of coronavirus are diagnosed in the coming days and more countries take drastic action to contain the transmission, El Al will, in all likelihood, suffer more.
That said, the airline is conscious of the impact coronavirus will have on its operation. It is thought that El Al has applied for a bridge loan which will help to stabilize its finances during this period of reduced travel demand.
In Israel, health officials have diagnosed 100 cases of coronavirus with a 4% recovery rate.
What do you make of this announcement? Let us know in the comments below!