El Al ready to use slots as loan collateral
As it scrambles for ways to raise USD100-150 million, a condition for the state funds it has secured, El Al Israel Airlines (LY, Tel Aviv Ben Gurion) has not only put a stake in its frequent flyer scheme up for sale while retaining majority control of it, it is also looking to leverage its airport slots.
Talks on the sale of 30% of the Matmid Frequent Flyer Club to Bank Hapoalim, local supermarket giant Shufersal, or telecoms firm Bezeq for around USD250 million are not close to a conclusion, the Hebrew-language business daily Calcalist reported on February 20, so the loss-making flag carrier is examining another chance of drumming up financing, by mortgaging the slots it owns at major airports.
These slots are worth tens of millions of dollars, and their value is particularly high at busy, congested airports such as London Heathrow, New York JFK, Paris CDG, Hong Kong Int’l, and Toronto Pearson. With some of these pitched as collateral, El Al reckons it may be able to obtain a loan of USD100 million from a large non-Israeli bank, the newspaper said.
El Al has lost nearly USD1 billion in the last four years, its financials show, but at the end of September 2021 it still had USD198 million in cash plus bank loans and short-term credit amounting to USD1.15 billion (not including its aircraft leasing liabilities).
Given its alternating pandemic-struck fortunes in recent months, its share price reached its lowest level for more than a decade in December, only to rise 70% from that trough, a trend that reports of further investment by controlling shareholder Kenny Rosenberg and a possible merger with Arkia Israeli Airlines have also boosted. That volatility reflects the repeated imposition of restrictions on flights in Israel and around the world.
According to the business daily Globes, with the relaxations on travel restrictions now taking place worldwide there has been a substantial rise in bookings for flights to and from Israel. El Al now plans to restore routes that were halted during the pandemic, such as direct flights between Tel Aviv Ben Gurion and Boston.