El Al Airlines is readying plans to lay off 1,000 permanent and temporary employees, or about 16% of its total payroll, as the global coronavirus epidemic takes a growing toll on its business. It also suspended flights to Italy.
CEO Gonen Usishkin instructed managers to come up with a plan for layoffs after Israel’s flagship carrier told the Tel Aviv Stock Exchange on Thursday it expected its revenues to be between $50 million and $70 million lower for the January-April period, compared to the corresponding period last year, due to the impact of the virus.
Two weeks ago, El Al had estimated the drop in revenues would be about $30 million. Thursday’s revised estimate does not include the added losses from suspended service to Italy, which is a major travel destination for Israelis.
The airline said that some of the lost revenue would be offset by lower costs, especially for fuel as the coronavirus has also caused a decline in global oil prices, so that the impact of lost revenue could be as little as $25 million. However, it warned that this estimate remains fluid.
“The situation is in flux and out of the company’s control,” El Al told the TASE. “Factors such as the spread of the epidemic or its halt, decisions of different countries and relevant authorities in Israel and overseas to suspend or renew flights, or changes in demand, could affect the company.”
Shares of El Al, which have tumbled this month as the epidemic has caused global air travel to decline, ended down 7.5% at 71 agorot (20 cents). Since February 2, they have fallen more than 25%.
El Al has been forced to suspend flights to Beijing and Hong Kong and had cut back the number of flights to Bangkok until it finally announced on Thursday it was suspending them as of next Monday. The suspension of flights to Italy, which came after Israel’s Health Ministry issued a travel warning for the country, goes into effect Friday and will last until March 14.
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The cabinet is expected to meet Sunday to discuss financial aid to Israeli airlines affected by the coronavirus. El Al employed 6,356 people as of the end of last year.