El Al asks gov’t permission to postpone $105mn offering
El Al Israel Airlines (LY, Tel Aviv Ben Gurion) has asked Israel’s Ministry of Finance for permission to postpone its USD105 million share offering planned by the end of July “in light of changes in the business environment and the prevalence of the Covid-19 Delta variant.”
As previously reported, the Israeli government had instructed the cash-strapped flag carrier to conduct an offering of shares, warrants, or a mix of the two as a key condition to receiving a USD210 million bailout package.
But in a disclosure to the Tel Aviv Stock Exchange on July 28, El Al said that it was still in talks with the ministry to fulfil its obligations in its deal with the state to issue share capital, and “there is no certainty that the Ministry of Finance will agree to the postponement.”
The filing was signed by Avigal Soreq, who has been chief executive at El Al since January, and chief financial officer Yitzhak Eliav.
As part of the agreement reached in May, El Al was to receive an advance of USD210 million for future tickets for security personnel covering the next 20 years, while the airline agreed to an offering of half that sum, with controlling shareholders Kenny and Eli Rosenberg committed to buying shares worth USD43 million.
El Al has said that its resumption of flight operations has been hampered by the Israeli government’s own tough restrictions on international travel, including a ban on travel to countries with high infection rates such as the United Kingdom and an ongoing ban on all non-Israeli passport holders entering the country.
The airline has laid off 2,000 of its 6,000 staff and has a further 1,400 employees on unpaid leave at least until the end of August, and it is now considering making 300 more people redundant, the financial daily Globes reported.
In a letter to employees quoted by the Hebrew-language daily, Soreq confirmed the request to the ministry and wrote: “We are in a complex situation where the prolongation of the coronavirus crisis and the Delta virus have led to government decisions to impose further restrictions on flights abroad and defer entry to vaccinated tourists, declaring more countries as ‘red’.”
He also criticised some media outlets for falsely reporting that certain countries were about to become red, implying an imminent complete ban on travel, such as Greece and the United States. The reports turned out to be incorrect and merely increased the uncertainty surrounding El Al’s future business plan, he said.