Israel is slowly relaxing restrictions in the country following the COVID-19 outbreak. However, as the government rebuilds its economy, El Al is still waiting for financial support.
A lot at stake
It was previously reported that El Al reached an agreement with the Israeli state. However, The Jerusalem Post reports that the airline is still waiting for the bailout, worth $400 million, to go through. With talks still ongoing, the future of the firm has come into question.
Avner Yarkoni, former director-general of the Civil Aviation Authority of Israel and a lawyer specializing in aviation law, feels that it is too late to save his country’s flag carrier. He highlighted how the company was already in a bad state before the coronavirus pandemic.
El Al recorded a net loss of $60 million last year. This figure is even higher than its net loss in 2018. Therefore, it is more likely to struggle to overcome the newer setbacks due to these existing problems. Even with a bailout, the operator could still not have enough funds to remain liquid.
“The question is whether the government will support it, not whether they collapse. I think they’ve already collapsed,” Yarkoni said, as reported by The Jerusalem Post.
“The salaries are very high, there is a large volume of employees [compared to customers served] and they operate only five days a week which I don’t think is a good idea. If it was, there would be at least one other airline in the world that does it.”
Nonetheless, Yarkoni believes the company will still be bailed out by the government. He says that this will be an unavoidable decision as there is not any other option. The country needs one major airline, and a carrier like El Al is also required for security purposes.
The ambition is there
Even though the losses were piling up over the years, the carrier did gain some momentum before the pandemic. In 2019, it renewed its fleet with 14 new Boeing 787 Dreamliners, replacing older planes such as the Boeing 747. Additionally, it served more passengers than ever before.
However, the global health crisis would have set the operator further back following all the flight suspensions and aircraft groundings. Even though its financial state is dire, it will put up a fight as it plays a crucial part in Israel’s economy. The airline has been serving the nation since 1948, and it should eventually work out a deal to help it overcome this tough period.
Simple Flying reached out to El Al for comment on its financial situation but did not hear back before publication. We will update the article with any further announcements.
What are your thoughts on El Al’s prospects? How do you feel the airline will cope over the next few months? Let us know what you think in the comment section.