LONDON – Israeli flag carrier El Al Israel Airlines (LY) has decided to accept a rescue package from the Israeli government after its first rejection of the measure. As part of the aid package, the company will receive loans amounting to US$50m, most of which is guaranteed by the state.

The airline also expects to raise a further US$150m through the sale of shares. If they are not fully received by the public, the state will take over the papers, which will make it a shareholder in the company again.

El Al recently suspended all flights due to a dispute with the unions.

El Al 777-200ER. Photo: El Al

Indefinite Suspensions of Operations

On July 1, LY announced all flights and other operations had been suspended. The announcement came in a turbulent time for the airline, with Q1 cash loss and workforce union disputes.

At the time, El Al CEO Gonen Usiskhin ordered all aircraft to return to Israel, and the airline is reportedly refusing to rebook US passengers, citing complaints with the US DOT against LY.

The airline is bleeding cash, so the acceptance of the state aid was reasonable; however, problems have been around for the airline for a while, including an unnecessarily large workforce and high salaries.

El Al Boeing 777-200ER. Photo: Andrea Ongaro

Return to Manchester

At the end of May, LY operated its first non-stop service from its base in Tel Aviv to Manchester in 18 years. The airline last operated this route in 2001.  

The flight was operated with one of the carrier’s Boeing 737-800 aircraft, set up in a two-class configuration with a Business and Economy Class seating layout. The new route is one of the new European destinations in El Al’s network.

In addition to Manchester, El Al also launched a new service to San Fransisco (SFO) and upgraded its London-Heathrow (LHR) service to its brand-new Boeing 787-9 Dreamliner.