El Al Cuts Several European Flights Amid Coronavirus Fears

Move comes due to drop in demand, not to official warnings. Meanwhile, epidemic does little to deter mall shoppers

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An El Al-branded staircase at Ben Gurion International Airport, August 2017.
An El Al-branded staircase at Ben Gurion International Airport, August 2017.Credit: Meged Gozani

El Al Airline suspended flights to many European destinations on Monday, saying demand had fallen so much due to coronavirus fears that it made no business sense to service the routes.

Israel’s flag carrier had already suspended flights to some destinations in Asia and Europe following travel warnings issued by the Israeli Health Ministry. But Monday’s suspensions were for cities that the ministry had not cited, including Vienna, Budapest, Brussels and Frankfurt, and included countries where the virus has not been known to have spread.

“Due to the unusual circumstances arising from the coronavirus, including directives and recommendations to the public by the Health Ministry, we have been forced to make business adjustments on certain flights,” El Al said.

The suspensions are the latest blow to the airline from the virus, which has depressed air travel. El Al said on Thursday it expected a loss of between $50 million and $70 million in revenue for the period of January through April, a figure that did not include all the cancelled flights implemented at the time. Some of that loss will be offset by lower costs, because it is flying less, El Al said.

Travelers wear masks as they wait in a terminal at Ben Gurion International airport in Lod, near Tel Aviv, Israel, February 27, 2020.Credit: AMIR COHEN/ REUTERS

The Tel Aviv Stock Exchange was closed Monday for Election Day, so there was no immediate stock market reaction. However, the carrier’s shares have been pounded over the last month as the coronavirus effect has grown.

Until Monday, El Al had called off service to Beijing, Hong Kong, Bangkok, Milan and Rome.

El Al CEO Gonen Usishkin said last week it would need to lay off 1,000 of its 6,360 employees. However, the final decision rests on whether Israeli government aid and labor unions agree to temporary pay cutbacks instead of job cuts.

The airline is seeking aid in the form of a $100 million to $150 million loan that would help cover cash flow costs of $30 million to $40 million per month that it pays to lease Boeing 747 Dreamliners and other aircraft. In addition, it is asking the Israel Airports Authority to suspend $8 million in charges it collects from the carrier every month.

Prime Minister Benjamin Netanyahu has said he supports efforts to help the airline. On Monday, the Histadrut labor federation called on the government to allocate 50 million shekels to help prevent layoffs.

The extent of the crisis at El Al, and the airline industry generally, is so bad that the airline’s ordinarily militant unions have chosen for now to avoid any action in response to the threatened layoffs.

Israeli airliner El Al planes parked at Ben Gurion airport near Tel Aviv, Israel, April 21, 2013.Credit: Ariel Schalit / AP/ אריאל

In addition, management and the unions are discussing a hiring freeze on 60 pilots and 100 flight attendants that began training at the start of the year and to suspend future trading classes.

Avi Edri, who is in charge of transportation workers at the labor federation, told TheMarker over the weekend that he was prepared to consider temporary wage cuts to tide El Al over the difficult period. He said that because the coronavirus wasn’t expected to last more than another three or four months, there was no reason to fire workers.

El Al’s coronavirus woes stand in marked contrast to the Israeli retail sector, which hasn’t suffered to the same extent from consumers worrying they might contract the virus on crowded stores and shopping centers.

Shva, the nationwide processor of credit card payments, said that shopping on Election Day, which is a legal holiday, was about 10% lower than in Israel’s previous election in September. However, spending was much higher than a usual weekday, with transactions between 9:00 A.M. and 1 P.M. reached 250 million shekels ($71 million) and merchants said they expected to match the last two election days.

“We believe that over the sources of the day the number of visitors will reach the same levels as the two previous elections days, at about 60,000 people,” said Alex Kaplan, marketing manager at Tel Aviv’s Dizengoff Center shopping mall.

The Azrieli Center in Tel Aviv on the day of Israel's 20th Knesset elections, March 17, 2015. Credit: Ofer Vaknin

Ofer Malls, one of Israel’s biggest mall owners and operators, said the number of visitors to its properties was three-and-a-half time an ordinary shopping day. It said cafes and restaurants were filled to capacity and turnover at stores higher.

Liran Elkayam, CEO of Jerusalem’s Hadar Mall, said traffic was about double the usual weekday level of 20,000. “Families are coming and using Election Day to buy for the Purim holiday,” she added.

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