Eli Rozenberg, the son of Kenny Rozenberg, the founder of the New York-based healthcare group Centers Health Care, is the potential buyer of El Al Airlines. TheMarker and other Israeli media had been reporting in recent days that there was a buyer for the beleaguered Israeli flag carrier, but he had not been named publicly.
Rozenberg submitted an application for a license last week to control the airline. A yeshiva student who lives with his wife and children in Jerusalem, Rozenberg has Israeli citizenship, which is the first requirement for being granted a license.
The news sent shares of El Al up 4.1% to 63 agorot (18 cents) on the Tel Aviv Stock Exchange mid-day Sunday.
Centers Health Care operates nursing homes and short-term rehabilitation facilities and provides an array of health care services in the United States. Kenny Rozenberg’s wealth is estimated at between $500 million and $1 billion.
Sources said that talks with Knafaim, the publicly traded company through which Tami Mozes Borovich controls El Al, had not started because Rozenberg has not yet won a license. Rozenberg, who is being represented by Reem Aminoach, an accountant and reserve army colonel, is reportedly ready to buy the financially troubled airline without any preconditions.
Rozenberg’s offer comes as El Al’s board last week approved a treasury rescue plan under which the government would guarantee 75% of a $250 million bank loan taken by the airline. In addition to making $400 million in cost cuts, El Al would be required to raise $150 million in equity capital through a share offering, with the government committing to buy any stock investors do not purchase.
The equity fundraising component could leave the government holding 61% of El Al, nationalizing the airline 16 years after it was privatized.
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El Al has been stricken especially hard by the coronavirus pandemic. It has put almost its entire staff on unpaid leave and has canceled all flights, saddling it with about $350 million in customer refunds it must pay on top of $1.3 billion debt it is already carrying.
The cost savings are expected to come mainly from pay cuts and layoffs. So far, El Al management has reached agreements with workers’ committees representing flight attendants, maintenance and administrative workers. The accords will enable the carrier to lay off 1,750 of the approximately 6,300 employees that were working for El Al before the coronavirus outbreak. The layoffs will save the airline $118 million annually.
Another major component of the savings is expected to come from the airline’s 650 pilots, the one group that has yet to reach an agreement. Negotiations between the two sides resumed Sunday morning amid reports that the pilots will demand an equity stake in El Al in exchange for 150 job cuts and salary reductions in the tens percent for those that remain.
As part of the cost-cutting, El Al will also give up some of its fleet of short-haul Boeing 737 aircraft and eliminate unprofitable routes, although it will likely keep all its newest Boeing 787 Dreamliner jets.