Treasury to bail out airlines again as sanctions loom

After the Histadrut labor federation declared a labor dispute with Israel’s aviation industry on Tuesday, the finance ministry said it would provide additional funding to El Al, Israir and Arkia to help them stay afloat.

In a letter sent by the ministry to airline executives, the Treasury said it would issue bonds on behalf of the airlines to incur debt they will not have to pay off for two years. This was conditioned on the fact that the owners of the companies were also pouring millions of dollars into their airlines.

Finance Minister Avigdor Liberman said he was working to secure deals with airline executives in the coming days.

“I have met everyone from the airlines and heard their proposals,” Liberman said at a press briefing on Wednesday. “I hope that the airlines will see this not only as an aid, but that they will present efficiency programs for their airlines that reflect the new economic situation.

“I also look forward to seeing what shareholders are willing to offer from their own accounts,” he said. “I hope they will do more than just ask the state to give them $ 250 million.”

The ministry has yet to pledge how much each airline will receive, but it is believed that El Al, the country’s largest carrier, will need $ 100 million. and $ 200 million, and that Israir and Arkia will need $ 10 to $ 20 million. each. The terms of the loan will not affect those of the airlines’ earlier deals made with their previous bailout deal earlier this year, such as El Al’s commitment to provide flights to aviation security officers for the next 20 years.

The Treasury decision will not affect the labor dispute the Histadrut said on Tuesday, which could escalate into airport closures if not resolved, the national union said.

A passenger at Ben Gurion Airport (credit: RONEN ZVULUN / REURERS)

Histadrut fears that El Al, Israir and Arkia are considering laying off additional employees, having already laid off 1,900 of them earlier this year, or a third of its total workforce. He is also concerned that airlines will extend unpaid leave for some workers, change the terms of workers’ contracts, shut down some departments and outsource work overseas in a bid to cut costs, hurting businesses. local workers.

If the dispute is not resolved within two weeks, the Histadrut may begin imposing sanctions, which would likely include strikes and disrupted flight schedules. This would create even more inconvenience for travelers who already suffer from oppressive coronavirus regulations.

It is not yet clear how the loans would influence such plans. The government should not make new loans conditional on further rationalization measures.

Israeli airlines have bled money during the pandemic. El Al lost $ 531 million. in 2020 and saw its revenue drop by more than 70% due to canceled flights. The government has already spent nearly 750 million shekels. to save El Al and Israir from damage caused by months of canceled flights and airport closures earlier this year.

Continued closures or cancellations will widen those holes even further, putting the country’s aviation industry in danger of collapsing, airline executives have warned.

Source link

Leave A Reply

Your email address will not be published.