Last week, the Finance Ministry transferred $25 million to El Al.
By Lauren Marcus, World Israel News
Israel’s Finance Ministry is gearing up to transfer hundreds of millions of dollars to troubled airline El Al in an unprecedented bailout, Globes reported on Wednesday.
El Al is reportedly struggling to secure $250 million in loans, despite a 75% guarantee backed by the Israeli government. The embattled air carrier has asked the Israeli government to provide a staggering 82.5% guarantee on a loan of up to $400 million.
The Finance Ministry, according to Globes, is likely to grant the 82.5% guarantee on a loan of $300 million.
The guarantees are part of an Israeli government plan to save El Al from insolvency. Last week, the Finance Ministry transferred $25 million to El Al.
The funds were divided as a special $10 million interest free loan and a $15 million cash advance.
In a statement to Globes, the Ministry of Finance said, “The issue of loan guarantees is being negotiated between the state and the company as well as other subjects related to implementing the assistance plan.”
El Al responded, “We do not comment on our discussions with the Ministry of Finance.”
In September, an El Al IPO on the Tel Aviv stock exchange raised $150 million for the company. The Kanfei Nesharim group, owned by Eli Rozenberg, bought a 43% controlling stake in El Al. The Israeli government obtained a 14% stake for 116 million shekels.
In November, the airline announced that CEO Gonen Usishkin will step down from his position in the coming weeks.
“I wish to inform you that in a joint decision reached together with the chairman of the board, I shall end my term as CEO this coming January,” wrote Usishkin in a letter to El Al employees.
“The company’s board of directors has begun the search for my replacement. This is not a parting letter, and many challenges still await us, and also great hope.”
It’s unclear who will hold the role in the interim while El Al’s Board of Directors finds a replacement for Usishkin.