MIAMI – In March, Airways reported that Israeli flag carrier El Al (LY) was warning employees that it planned to lay off around 1,500 workers in the upcoming months. It appears that the airline has begun the layoffs – with numbers higher than originally projected.
Reuters reports today that LY is cutting 1,900 positions as part of a cost-cutting measure due to the effects of the COVID-19 pandemic. The cuts come even as the airline managed to decrease its quarterly loss.
El Al recorded a loss of US$86m in Q1 versus a loss of US$140m a year earlier. However, revenue declined 64% to US$117m, while expenses such as salaries and jet fuel dropped 54%.
According to Reuters, El Al’s new owners and management has accumulated debt as it revamped its fleet. Per the LY webpage, the airline’s fleet currently comprises 12 Boeing 787-9s, three 787-8s, 15 737-800s, and eight 737-900ERs.
Routes Shut Down
As is the case with other airlines, such as Emirates (EK), El Al is totally dependent on international travel, flying from its home base at Tel Aviv (TLV) — the airline formerly also flew from Jerusalem and Eilat. Thus, it was forced to suspend scheduled passenger flights in March 2020 at the outset of the pandemic when Israel closed its borders to most foreign citizens. This, of course, only compounded its financial problems.
However, the Reuters article says that Israel has rolled out the coronavirus vaccine rapidly and will begin to reopen to tourists on May 23 on a limited basis.
El Al, too, is one of the few airlines still flying into Israel as the fighting with Hamas militants in Gaza continues.
“These days we are going through a sensitive security period in which El Al is committed to its role in continuing to provide air travel to and from Israel,” said CEO Avigal Soreq.
El Al had negotiated a recovery plan/bailout package backed by the Israeli government. A condition of that plan is the laying off of 1,900 employees, nearly one-third of its staff. The process should be completed in Q2.
“This step, along with other measures we are taking, on the financial and operational levels, will lead us to put El Al back on track and … achieve a cash flow balance” in 2021, Soreq said.
Also, earlier in May, Reuters says that the government approved a bailout package for LY that has the state covering US$210m of company security costs. El Al also raised $83m in the first quarter from the sale of options. It plans a share issuance of US$105m by July.
And the Rozenbergs are solidifying their grip on the airline. On Wednesday, Israel gave permission for U.S. businessman Kenny Rozenberg to join his son, 28-year old religious student Eli Rozenberg, in controlling LY after the latter bacame an Israeli citizen. Funded by his father, Eli Rozenberg bought control of El Al last year.
Featured image: El Al 4X-ECA Boeing 777-258(ER). Photo: Alberto Cucini/Airways