El Al Israel will suspend operations until further notice following the announcement of a significant net loss. This also comes amid rising tensions between the El Al management and pilot unions.
An El Al Israel Boeing 787-9 leaving San Francisco for Tel Aviv. Photo by Chris Phan | AeroNewsX
Israeli media describe El Al Israel’s situation as a “financial crisis”. The carrier's entire flight schedule for today and indeed till further notice, is suspended. This includes both cargo and passenger flights.
The news comes after talks between El Al Israel and pilot union ended without success. Israeli media reports that, in what seems to be the peak of tensions between the pilot unions and management, El Al Israel threatened to move pilots to other positions after they refused to staff the carrier's small amount of flights today.
A representative of the carrier's pilot union, Nir Reuveni, criticised El Al Israel for being “unable to reach agreements with the employees" adding that the airline had breached terms of labour agreements. Reuveni went on to say that the carrier's CEO, Gonen Usishkin, was refusing "the [government’s] generous bailout offer of financing and is unable to lead the company at this time."
On the contrary, El Al Israel has been begging for financial support from the government, having reported a USD140 million loss for the first quarter of 2020 up from a USD55 million loss during the same period last year.
Israeli business daily, Globes, reported that the CEO had ordered all of El Al Israel's aircraft to return to the country in preparation for an entire shutdown of operations until further notice. The carrier hasn't actually operated regular flight services since April and did not intend to resume flights until 31 July. Repatriation and cargo services continued, however.
El Al Israel, which owes nearly USD350 million in refunds, is scrambling for state aid as it battles against the coronavirus crisis. The International Air Transport Association has, throughout the crisis, reiterated that government-backed aid is the only way out of this for airlines around the world.
Globes reports: "It seeks a $400 million cash injection, and has been conducting negotiations on two possible formats: receiving the entire sum as a loan mostly backed by a state guarantee, or a state guaranteed loan of $250 million and an equity offering of $150 million, also with state backing."
Other Israeli media report, however, that banks had refused to provide El Al Israel with the required amount, even if the government were to guarantee a large majority of the money. Despite that, the carrier's struggles won't be short-lived with the coronavirus expected to hit airlines hard for at least the next couple of years.
80% of El Al Israel's employees are on unpaid leave. This consists of about 5,800 employees, of which 540 are pilots; just 110 of its 650 pilots are still flying. Management salaries have also been cut by 20%.