El Al Airlines said on Wednesday it planned to raise at least $105 million through an offering of shares, warrants or both to meet a key condition to receive a government bailout package.
Israel’s flag carrier said in a regulatory filing in Tel Aviv that the offering would be held by the end of July, though it added that not all conditions in the bailout arrangement had been met, including a final government approval. It said it had signed a collective bargaining agreement with its labor unions for state-mandated job reductions.
The government agreed to a $210 million bailout of El Al, which changed hands in late 2020 and was forced to slash one-third of its staff, or 2,000 workers, and other costs. The state also required new owner Eli Rozenberg to inject more cash into the airline.
Under the aid plan, the government will buy $210 million-worth of flight tickets in advance at El Al and its low fare subsidiary Sun Dor.
The bailout is contingent upon El Al issuing capital of $105 million.
El Al’s loss swelled to $531 million in 2020 from $60 million in 2019 due to the COVID-19 pandemic.
The airline, which also has a new board and management, has reported losses for three years and racked up debt to renew its fleet. It suspended scheduled passenger flights last March at the outset of the health crisis when Israel closed its borders to most foreign citizens, compounding its financial woes.
- Plan allowing vaccinated tourists into Israel to be approved next week, minister says
- El Al losses quadrupled in final quarter of 2020
- Abu Dhabi's Etihad starts direct passenger flights to Israel
Israel has begun to open up some international routes again to its citizens but on a limited basis, citing concerns over new coronavirus variants, but it was unclear when tourists would be allowed to return.
CEO Avigal Soreq said last month that along with the implementation of an efficiency plan and a gradual increase in operations in 2021, the airline was working on a multi-year plan to emerge from the crisis.