El Al handed over $ 25million lifeline, struggling to find a loan

El Al Israel Airlines Ltd. (TASE: ELAL) is still struggling to secure a loan but received a short-term $ 25 million lifeline – a $ 10 million homeowner’s loan (interest-free) and a $ 15 million advance from the Department of Finances to ensure the safety of Israeli carriers. The $ 25 million will improve El Al’s immediate cash flow situation and allow it to repay some of its debts, especially to customers whose flights have been canceled.

El Al will also receive an additional $ 8 million to secure flights for Israeli airlines in December, with a significant increase in flights due to the opening of the Tel Aviv-Dubai route.

But El Al has still been unable to secure bank loans as part of the government’s stimulus package, which began in September when the airline raised NIS 505 million in a public offering on TASE. The offer led to a change of ownership, with Eli Rozenberg becoming the majority shareholder with a 45% stake. The state also participated in the bid, buying shares for NIS 116 million and a 14.5% stake.

In El Al’s third quarter financial report, released last month and marked as “going concern”, the company also indicated that it had not yet been able to obtain the $ 400 million bank loan she requested and was exploring options such as increasing a bond. El Al also asked the Ministry of Finance to increase the government guarantee for any loan or bond from 75% to 82.5%, but so far no response has been received.

The finance ministry told “Globes” that the issue was under discussion. Market sources believe that if El Al can find a bank to extend the loan, then the finance ministry will increase the guarantee, but not if bonds are issued.

El Al also said in his financial report that he had not yet succeeded in reimbursing passengers for canceled flights as required by law.

El Al collects 97.5% of flight security spending for Israeli airlines (including Israir and Arkia). The agreement on this issue was recently extended until July 31, 2021, with an option to extend until December 31, 2021.

In 2020, El Al received around NIS 400 million for flight security, up from NIS 946 million in 2019 – a drop reflecting the sharp reduction in the number of flights due to the Covid-19 pandemic.

Posted by Globes, Israel business news – en.globes.co.il – December 3, 2020

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