El Al Airlines was thrown a financial lifeline on Monday after officials agreed that Israeli airlines would only be required to refund ticket holders for flights canceled due to the coronavirus pandemic by October 1.
The agreement between Economy Minster Amir Peretz, Justice Minister Avi Nissenkorn and Transportation Minister Miri Regev means that financially troubled El Al will can repay the 1.1 billion shekels ($320 million) it owes ticket holders much later than required under legislation passed by the Knesset last month.
The new deadline, which applies to Israir and Arkia as well as El Al, still needs to be approved by the Knesset.
Under an amendment to the Airlines Law approved by the Knesset in July, carriers had been required to refund money 90 days after a flight is canceled or 30 days after the legislation was passed, whichever is later. That meant that the first refunds were due to be paid on August 14.
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The new agreement says that only airlines that have suffered a drop of 70% or more in their traffic can wait to refund ticket holders until October 1. Otherwise, they must return the money immediately. In El Al’s case, if it reaches a rescue agreement with the government and issues shares, it also must refund the money immediately afterward.
El Al has agreed to a treasury plan under which it will be entitled to $250 million in government-guaranteed loans on condition that it raises $150 million in equity capital via a share sale to the public. That offering is expected to take place in late August or early September. El Al is expected to file a prospectus by the end of this week.