The Israeli government has agreed to bail out the national carrier, El Al Airlines, albeit with tough conditions set by the Finance Ministry. The decision was made at an internal meeting in the ministry.
Under the agreement, the state will grant loan guarantees for 80 percent of a $400 million loan.
According to a report by the Globes business website, the agreement requires the termination of 2,000 employees – about 33 percent of El Al’s work force – which would total an operational savings of $50 million.
Workers who oppose the layoffs held a protest Sunday outside the Finance Ministry.
In addition, the agreement requires the airline to free flights for employees and their families, implement salary cuts for senior executives and the board of directors, and implement a temporary halt in distribution of dividends to shareholders and party-at-interest deals – all of which is expected to total an operational savings of $50 million.
The plan, as it was presented during discussions Sunday night could achieve annual savings of NIS 300 million, according to Globes.
El Al employees had already agreed to give up their right to free flights for a five-year period, and NIS 200 million has been paid to shareholders in dividends over the past five years.
Some 6,000 El Al employees are still on unpaid leave until the end of June; the airline is not flying passenger flights at all until at least the end of this month.
The government also expects the airline’s owners to inject NIS 100 million ($28.5 million) into the company, or to agree to dilute their stake by the appropriate percentage. (El Al’s market cap is NIS 350 million.) The state will also receive a stake in the company.
