El Al canceled all its scheduled flights late Tuesday night as a conflict between the airline and its pilots escalated.
All of the carrier’s passenger and cargo flights have been canceled until further notice.
El Al was forced to cancel flight LY003 to New York that would have departed Wednesday afternoon, and transfered passengers to a United Airlines flight leaving for New Jersey on Thursday instead. A Tuesday flight to Paris was also canceled.
El Al stated that the cancellations were due to “operational reasons,” but it appears that the real reason is pilots’ refusal to fly as long as the company does not stand by a commitment to the workers’ former union chief to allow 30 pilots who normally fly 737 passenger planes to fly cargo flights on 787 Dreamliners.
The company’s 737 pilots were put on unpaid leave three months ago, and their salaries plummeted to 10,500 shekels a month, which is causing significant tension among the pilots and El Al management.
The company had said that if Wednesday’s scheduled flights were canceled, it would put the remaining 110 pilots still on the payroll on unpaid leave.
The carrier had suspended regular commercial flights at least until the end of July. To compensate, it had expanded its cargo operations by refitting its commercial planes.
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El Al has been in dire straits amid the coronavirus crisis, and most of its workers are on unpaid leave.
The company released its first-quarter results late Tuesday, revealing a steep drop in revenue.
The company said it lost $140 million in the first three months versus a $55 million loss a year earlier. Revenue dropped 25% to $321 million.
Israel’s flag carrier is seeking state-backed loans to help it through the crisis, as foreigners are barred from entering the country and incoming Israelis must enter 14-day quarantine.
The government argues that the airline’s problems, including a bloated workforce, high salaries and a weak balance sheet, began well before the pandemic.
The first includes $400 million in bank loans, most of which will be guaranteed by the state, and El Al issuing 150 million shekels ($43 million) in shares. In the second, the loan amount drops to $250 million and the stock issue rises to about $150 million with the government committing to buy whatever shares are not purchased by the public.
It is seeking a government bailout to keep it afloat. The pilots union is reportedly hoping that controlling shareholder Tami Mozes-Borovich will lose control of the company as part of the deal.
The company has been renewing its fleet in recent years to better compete with an influx of foreign low-cost carriers, but that process has been halted.
El Al cancelled lease agreements for two Boeing 737-800 planes and returned another three. The company also reached a sale-and-lease-back agreement with a foreign company for three 737-800s for $76 million.
“The scope of the coronavirus crisis is something we have never seen, and no airline, no matter how strong, can survive without government assistance,” said CEO Gonen Usishkin.
With reporting by Reuters.