The spread of COVID-19 has not been kind to EL AL, which is laying off workers and warning off an imminent collapse. But the Israeli government has publicly pledged to step in with support, if required.
EL AL Warns Of Collapse, Announces Job Cuts
Last week, an EL AL official warned:
“It’s a catastrophe. The airlines here will collapse within weeks. El Al, even before the Health Ministry announcement, sustained damage of 200 million shekels from the coronavirus.
“If the state doesn’t wake up there won’t be an airline here in a matter of weeks.”
The Health Ministry announcement was a warning to Israelis to avoid all non-essential travel abroad.
While more measured, EL AL CEO Gonen Usishkin also offered a grave warning:
“There are difficult days ahead and it is possible that we will be required to take dramatic steps and make painful decisions.”
Those painful decisions have already begun, with EL AL announcement late last week that it will fire 1,000 employees, about 1/6 of its workforce.
Unions were taken by surprise and some in Israel view this simply as a negotiating tactic, but EL AL has suspended service to Asia (finally suspending service to Bangkok after earlier suspending service to China and Hong Kong and delaying new service to Tokyo) and is now cutting back service to Europe.
EL AL has also let go flight attendant and pilot trainees and announced a general hiring freeze.
EL AL met with union negotiators yesterday in Tel Aviv. While no resolution has been announced, the union is urging swift action and allegiance to EL AL:
“We’re in a state of emergency. All the authorities need to act to prevent the collapse of El Al and the other airlines. I will tell all the committees to fly with only Israeli companies.”
Israeli Government Pledges Support
Prime Minister Benjamin Netanyahu has formed a committee to explore ways to help EL AL and told workers:
“I appreciate the work you do, and we will help you and care for El Al.”
The bailout may not be with direct cash aid, but by cutting taxes/fees and providing marketing assistance in an effort to boost tourism once COVID-19 is under control.
EL AL expects to lose $50-70 million in revenue this quarter and that projection was before EL AL’s latest suspension of flights to Milan.
It’s a rough time for the global airline industry, but EL AL has been hit particularly hard. With the Israeli government urging citizens to stay him and tightening its borders, EL AL has suffered greatly. But seen as a national asset, even financial collapse will not doom EL AL.
image: Shahar Azran / EL AL