To Get $300 Million Loan, El Al Seeks To Raise $75 Million

Israeli national flag carrier El Al is looking to raise $75 million capital by the third week in September to get a $300 government-backed loan. Following the disruption brought on by the COVID-19 pandemic, which also includes the closure of Ben Gurion Airport (TLV). While dealing with the fallout from the coronavirus, El Al has reached new agreements with its employees, including a 30% cut in jobs while also returning five Boeing 737-800s to lessors. Depending on the demand for air travel, El Al can also return a further six aircraft.

Eli Rozenberg is unfazed by the banks’ demands to inject $75 million into the airline. Photo: Getty Images

Looking towards the future, El Al is predicting that its current fleet will achieve 75% of its utilization during 2022 and 2023 and that it would return to full capacity by 2024. According to a report last week in the Israeli financial newspaper Globes, El Al leading shareholder Eli Rozenberg is unfazed by having to inject $75 into the airline as a condition towards securing the state-backed $300 million loan.

El Al sees a bright future

When speaking to Globes last week, a spokesperson for Kanfei Nesharim Aviation, a holding company set up to oversee El Al, said:

“Rozenberg would do everything required in order to ensure a secure future for El Al. Rozenberg very much believes in this investment, despite the company having to cope with a difficult global crisis for the world of aviation and a third lockdown which has totally disputed its operations.

Kanfei Nesharim added, “Rozenberg invested $108 million in El Al and has extended a $10 million loan and is committed to injecting tens of millions of dollars more. El Al today has more committed owners, and a professional management and board of directors with rich experience.”

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COVID-19 is irrelevant long term

El Al is estimating earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) level of $396 million for 2022, which will rise to $494 million in 2024. According to the aviation website, FlightGlobal  El Al says it can reduce expenses by a further $115 million that includes a saving of $60 million from “streamlined” salaries. El Al also points out that what has happened to the airlines during the current medical emergency is irrelevant when understanding the long-term trend for the airlines.

El Al
El Al sees a bright future. Photo: Getty Images

El Al was able to cope with the financial woes created by COVID-19 with a $150 million share issue, which resulted in Eli Rozenberg’s Kanfei Nesharim Aviation becoming the airlines controlling shareholder with a 43% stake in the airline.

Eli will be calling the shots at El Al

At the time of the share acquisition, El Al board members claimed that the 27-year-old  Israeli American entrepreneur was just a front man for his father Kenny Rozenberg, who owns New York-based nursing home chain Centers Health Care.

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Eli Rozenberg owns 48% of El AlPhoto: Getty Images

To buy a controlling stake in El Al, Eli borrowed $100 million from his father and, despite this, says he will be calling the shots and that his father will have nothing to do with the running of the airline.

While times seem pretty bleak for the air industry, El Al seems upbeat about the future. Do you think this is to raise the $75 million, or is El Al spot on? Please tell us what you think in the comments.