El Al to be nationalized, state to purchase $150m. worth of stocks
The state will take over the national airline company until it can be sold to an investor.
By JERUSALEM POST STAFFAn Israeli flag is seen on the first of Israel's El Al Airlines order of 16 Boeing 787-9 Dreamliner jets, as it lands at Ben Gurion International Airport, near Tel Aviv(photo credit: REUTERS/AMIR COHEN)El Al's Board of Directors ruled on Sunday evening in favor of the outlay the Finance Ministry suggested in order to keep the airline in business during the global coronavirus crisis, and the ongoing pilots strike that halted all operations, Calcalist reported on Sunday.The state will guarantee a $250 million loan and will purchase $150 million worth of stocks in the company, meaning it would control 61% of El Al. The process of releasing these new stocks for the state to buy them is expected to be completed by early October.The goal is that, when the company is stable, an outside investor would purchase it. An unnamed Israeli citizen had already made inquires into the matter, Haaretz reported last week.The decision ends 15 years during which the firm was controlled by Knafaim Holdings – specifically, by David Borowitz and his wife Tami Moses Borowitz who together controlled 32% of the shares.The basic condition for the ministry’s outlay to be carried out is that new agreements will be signed with four labor unions that represent different groups of El Al workers. The union of El Al pilots led a general strike, as they objected to the continued control of Knafaim in the company and cuts to their salaries, and are expected to present a challenge to the state as well, since they have historically enjoyed excellent conditions. Transportation Minister Miri Regev reportedly told the head of the El Al Pilots Union that “Israel will not allow El Al to go bust” days before the Board of Directors made the Sunday decision.Regev said on Sunday that the decision is the “first step to place El Al back on the runway” and that the period of the state controlling the company is meant to serve as a transition period to last “as long as needed to maintain Israel’s aviation independence.”Due to the coronavirus pandemic which nearly destroyed the tourist sector in Israel, as well as Israeli law, which compels airlines to reimburse clients for their air tickets if flights were cancelled, El Al ends the first quarter of 2020 in the black after losing $140 mil in the first quarter.
Related TagsEl AlMiri Regev
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