MIAMI – The International Air Transport Association (IATA) has issued a grave warning stating that 95,000 Israeli aviation jobs could be at risk if there is more delay to restart the Israeli aviation industry.
El AL (LY), Israel’s flag carrier, announced it has pushed back passenger services until July 31, 2020. The news comes as other airlines around the world have announced they will be resuming passenger services much sooner.
Emirates (EK), Qatar (QF) and Virgin Atlantic (VS) are among other airlines around the world who have announced a return to service well before LY’s July 31 target.
No tourists allowed
Israel has put strict measures in place, letting into the country only citizens and residents who then must complete a 14-day quarantine period upon arrival.
Tourists, as it currently stands, are not allowed to enter the country under the current rules.
If the Israeli government wants to kickstart the economy and help LY survive, it may need to look at abolishing the 14-day quarantine and coming up with an alternative border policy, which will not only contain the COVID-19 spread but also help to open up the countries borders.
El Al needs a bailout to survive
El Al has only been operating cargo and repatriation flights since the start of the COVID-19 pandemic. The airline currently has 6,000 of its 6,500-strong workforce on unpaid leave, pending the return of scheduled flights.
The airline has warned that thousands of redundancies will be needed if the carrier wants to survive beyond the pandemic.
However, the loss-making airline is now in talks with the Israeli government regarding a NIS250m (US$72m) bailout. This is in contrast to the multi-billion dollar deals other countries have been offering their carriers.
As such, the airline is in desperate need of backing to stay alive, having posted huge losses in Q4 2019. If the bailout is approved, the deal would see 60% of the airline becoming state-owned.
El Al CEO Gonen Usishkin has previously warned that the airline would not renew regular operations without securing a government-backed bailout agreement
Restrictions’ huge impact on the airline
El Al is estimated to suffer a 55% drop in traffic this year, that is 13 million passengers, as a direct result of COVID-19. This will cause the airline to have a drop in revenue of US$3.2bn.
The wider impact on the Israeli economy could cost the country as much as US$8.3bn, according to the Global Airline Trade Association (GATA).
“Airlines in Israel are suffering an unprecedented collapse in revenues, and in order to preserve air connectivity, it’s vital that Israel follow the lead of many other governments and provide financial assistance to the industry,” said Rafael Schvartzman, IATA Regional Vice President for Europe.