Israel’s El Al Airlines agrees to repay state’s COVID loan by year’s end

JERUSALEM (Reuters) – El Al Israel Airlines plans to repay a $45 million loan it took out from the government during the COVID-19 pandemic by the end of the year, as part of a agreement reached between the airline and the Ministry of Finance, they announced on Sunday. .

The loan was part of a government package to help the airline through the crisis, during which Israel’s borders were closed to foreign tourists for nearly two years, depressing the company’s revenues and profits Israeli Air Force.

The ministry and El Al said repayment of the loan would be two years ahead of schedule, but as part of the deal, El Al’s planned $62 million stock offering would be delayed until in April 2023, while the state will advance security payments to El Al by $20 million. before December 20.

El Al, which has posted losses for four years and racked up debt to renew its fleet, has laid off 1,900 workers – nearly a third of its staff – as part of a government-mandated stimulus package to receive $210 million in aid at the peak of the pandemic.

Repaying the loan will remove or ease a host of spending restrictions on El Al and allow it to update its route network, add staff, lease new aircraft, invest in working capital and develop new revenue streams, he said.

El Al will still not be allowed to pay dividends or buy back its own shares until 2028.

“I’m sure this decision will improve El Al’s ability to grow and cope with a competitive market and changing reality,” chief executive Dina Ben Tal Ganancia said.

(Reporting by Steven Scheer; Editing by Elaine Hardcastle)

Copyright 2022 Thomson Reuters.

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