Every El Al flight has been grounded until further notice. Following an unresolved labor dispute, the CEO of the airline, Gonen Usishkin, has today ordered all aircraft to return to Israel, including those operating cargo flights.
All flights canceled
Israeli flag carrier El Al has been grounded with immediate effect. Globes reports that CEO Gonen Usishkin has ordered all the aircraft flying for the carrier to fly back to Israel immediately. This includes those on cargo runs, and those which were mid-flight at the time of the order.
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At least two passenger flights and four cargo flights that were scheduled for today have been scrapped. One, which was between Milan and London on a cargo trip, had to abandon its mission and head back to the Middle East.
Scheduled passenger flights were not available on a commercial basis, but El Al was operating some special flights to specific destinations. Commercial flights were set to resume after the end of July. However, now no special passenger flights or any cargo flights will take place until the CEO’s order is reversed.
Last night, El Al reported a loss of $140m in the first quarter of 2020. The airline is facing financial difficulties as a result of the coronavirus crisis and has been seeking a bailout from the Israeli state. In total, El Al is looking for a cash injection of around $400 million.
Globes reports that two formats are being considered for the bailout. The first would be getting the entire amount in the form of a loan, backed by a guarantee from the state. The other option would be a state-guaranteed loan of $250 million, along with an equity sale of $150 million.
The airline was said to be in ‘advanced stages’ of negotiations on its lifesaving bailout but required the support of its workers unions in order to finalize the deal. The pilots union failed to reach an agreement on Tuesday evening, with representative Nir Reuveni stating that El Al was not sticking to agreements made. He told the Times of Israel,
“[El Al is] unable to reach agreements with the employees, refuses the [government’s] generous bailout offer of financing and is unable to lead the company at this time.”
As a result, pilots refused to staff the scheduled flights for today. As a result, and possibly as punishment for non-compliance, the airline has been grounded entirely. A spokesperson for the airline told Simple Flying,
“Further to the announcement and actions made by the pilot’s union, EL AL’s CEO and management team are determined to finalize the proposal of state aid which will allow EL AL to gradually return to regular operations. The condition for granting the assistance is the signing of a agreement with the Israel Worker’s Union and the airline’s union to implement a streamlining plan for the airline.
“The planned schedule forJuly was developed with great effort and the company intends to implement it; for this purpose there needs to be active pilots and personnel to operate the flights.
“The flights need to be staffed accordingly and we expect the active pilots to show responsibility and agree to operate the flights as planned.
“The current suspension of flights are a result of labour dispute and not due to commercial reasons.”
When will El Al fly again?
At the moment, the future of the Israeli flag carrier hangs on the balance. Hundreds of millions in unpaid refunds could swallow up much of any bailout money that does come, leaving the company still with little capital to see it through.
Already, 80% of the airline’s 6,303 workers are on unpaid leave. With no flights operating, that number is set to rise to 100%, at least until operations resume once more. Net debt at the carrier is assessed as being some $2 billion, indicating financial issues well before the current crisis.
With cargo demand drying up as other airlines step in to fill the gap and previous issues of high competition and strong labor unions still unresolved, the future of El Al is not looking good.