Israeli airlines are realizing that they will not be able to go back to pre-coronavirus operations.
Until aviation activity was reduced, then suspended, due to the coronavirus pandemic, Israel's national carrier El Al operated 45 planes to some 60 destinations worldwide each day. In the past few years, the airline has acquired 15 Boeing 787 Dreamliner aircraft, and expanded its service.
Long before the coronavirus crisis reached its current level, El Al reported a $160 million hit to its revenue to the Israel Stock Exchange and submitted a request to the Treasury for help putting together a plan to restructure. The Treasury has yet to respond.
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El Al chairman Eli Defes said, "Every country needs to protect its local industries, and aviation generates billions and brings billions into the state."
"Tens of thousands of workers who are supported by aviation pay taxes, and if the state doesn't invest in this industry, the vacuum won't remain empty – foreign airlines will come in, and taxes will be paid to their countries. The taxes El Al pays go to the state Treasury, and it uses them for other things," Defes said.
According to Defes, the state holds "gold stock" in EL Al, which means that the airline is obligated to employ only Israeli pilots and that the planes are at the country's service whenever it needs them, in any state of emergency.
In the past few weeks, El Al has sent its planes to far-flung spots such as Colombia, Costa Rica, and Australia as part of the government's mission to pick up Israeli travelers stranded by closed borders.
"We are surrounded by hostile countries, and without strong local aviation, we'll be in a very problematic situation," he explained.
After El Al submitted its reorganization plant to the Treasury, the airline was hoping for an answer about a possible government loan. El Al requested $400 million in the form of a loan and an additional $200 million in guarantees. As of Monday, the Treasury has not responded to requests from Israel Hayom to clarify the status of the request.
Meanwhile, the government of Singapore announced that it would invest at least $13 billion in its national air carrier, and the US has announced a plan to invest some $58 billion in US airlines.
According to Defes, "The Treasury not responding [to our request] is one of the big disasters. All over the world, [governments] are giving billions upon billions to their airlines. We submitted a reorganization plan two weeks ago, and it's sitting there with no response. Even if the response is good, but late, it might not be relevant anymore."
El Al is not denying that its number of staff and work methods were out of line with the size of the company and the extent of its activity. However, experts think the airline is some six weeks away from total collapse. El Al, as well as smaller local airlines Arkia and Israir, support a merger, and if the Anti-Trust Authority approves it, the nation's three airlines might combine forces in order to survive.
Both Israir and Arkia are undergoing restructuring. Israir CEO Uri Sirkis and Chairman of Arkia Avi Homero are certain that the government must provide long-term loans, immediately, as well as approve the merger.
"We reached the [coronavirus] crisis in a situation that was different from that of other airlines, and that was after we executed a restructuring plan," Sirkis said.
"Amid the crisis, we are implementing large adjustments, and right now we are active through the end of the week, during which we will carry out some 40 rescue flights [for Israeli travelers]. We are also operating a daily cargo flight to London, and maintaining two to three flights a day on the route to EIlat. We haven't furloughed our pilots. We are keeping everyone up to the mark, with a 60% pay cut," he said.
Israir has asked the government for a loan of 100 million shekels ($28 million).
"Right now, Israir has enough cash flow to last until May, without taking aggressive action," Sirkis said. "We believe that the Finance Ministry will make its decisions this coming week, and we can only survive if we get the loan."
Homero noted that Arkia needed a loan of $25 million to remain in operation.
"The three airlines must merge, and if not that – Israir and Arkia must merge immediately," Homero said.
Chairman of the Israel Airline Pilots Association Meidan Bar said, "Aid to airlines is twofold: first, to ensure that an airline doesn't close down … and two, the nations of the world assist their airlines so they will be ready when everything is over. Then, every country will want its airlines to recover, because that is what will help the economy recover. Every day that passes without Israel helping [its airlines] like other countries are doing means weaker aviation when the crisis comes to an end. Lack of aid today means the collapse of the Israeli aviation industry in the near future."
