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Israel approves aid package to El Al, Israir

CM 09/05/2021

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The Israeli government approved on Sunday an assistance package of nearly NIS 750 million to aid the country’s ailing aviation industry following the coronavirus crisis.The package includes a NIS 685 million payment to El Al, as per the government bailout agreement for the national carrier that was reached in March, as well as a NIS 52 million payment to Israir.Under the agreement, the payment to El Al is structured as an advance payment for flight tickets for aviation security officers on the airline and its subsidiary, Sun D’or, for the next 20 years.The Finance Ministry also conditioned the deal on El Al’s controlling shareholders contributing to the financial stability of the company. El Al will be required to raise $105 million through a public offering, with controlling shareholder Eli Rozenberg buying at least $43 million of the shares.In addition, El Al also agreed not to distribute dividends or repurchase shares for the next five years. It had also agreed to reduce by 15% the salaries of the company’s management and the chairman of the board.”Understanding that the aviation industry is in a difficult and unique situation, and in order to ensure the resilience of civil aviation in Israel, the Ministry of Finance will provide assistance that will facilitate the activities of airlines during this period,” said Finance Minister Israel Katz. We will continue to do everything we can to lend a hand and support dealing with the consequences of the corona crisis.”The announcement follows months of negotiations after El Al’s plan to secure a state-guaranteed loan from the banks was stymied by the Finance Ministry. The arrangement will allow the national carrier to continue operating despite being pummeled by the grounding of the vast majority of flights due to the coronavirus pandemic.

Many El Al customers, as well as suppliers, have still not received refunds for flights canceled over the past year due to the pandemic; paying them back will be one of the airline’s first orders of business, the company has said.
Source: Jerusalem Post

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