TEL AVIV (Reuters) – Israel’s government announced on Wednesday a long-awaited bailout of its airlines to help them weather the coronavirus crisis and maintain operations in the midst of a year-long halt to international travel.
As part of a financial assistance program overseen by the finance ministry, the government will buy $210 million-worth of flight tickets in advance from flag carrier El Al Israel Airlines and its low fare subsidiary Sun Dor.
The tickets are for the airline security personnel posted at airports that its carriers will fly to over the next 20 years, the finance ministry said in a statement. The sum will stay the same even if security requirements change.
The government plans to offer ticket purchase arrangements to other Israeli airlines that fly Israeli aviation security personnel in the coming days, the ministry said.
Israel’s government had drawn criticism for previous aid offers that would have backed loans to airlines but stopped short of giving direct financial assistance. Other global carriers, like Germany’s Lufthansa, received government bailouts as far back as last summer.
The government had most recently offered to back 82.5% of a $300 million loan to El Al, contingent on its new owner, Eli Rozenberg, injecting more cash into the airline and cutting costs.
The finance ministry said that the flight ticket purchase program will replace the government’s offer to back the $300 million loan. The program is contingent on El Al issuing capital of $105 million, it added.
The aid plan will be submitted to Prime Minister Benjamin Netanyahu’s cabinet for approval in the coming days, the ministry said.
El Al has reported losses for two years and racked up debt to renew its fleet. It suspended scheduled passenger flights last March at the outset of the health crisis when Israel closed its borders to most foreign citizens, compounding its financial woes.
Israel has begun to open up some international routes again to its citizens but on a limited basis, citing concerns over new coronavirus variants.
Source: Economy - investing.com
