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TEL AVIV, ISRAEL - Israel's financially distressed flag carrier El Al struggles with further problems The Israel Airports Authority (IAA) halted the operation of the airline's cargo division flights due to its debts. The cargo flights have currently been the only source of income for the Israeli carrier. 


The announcement marks another blow for El Al, which has so far failed to reach an agreement following months of negotiations with the Finance Ministry for a $400m. government-backed bailout agreement. An emergency El Al executive meeting scheduled for Tuesday evening was attended by new Transportation Minister Miri Regev, Channel 12 reported. Securing a bailout deal is considered vital to ensure the survival of the coronavirus-battered airline.

In mid-May, El Al announced that it would be extending its halt on all scheduled flights to and from Israel until June 20, except for cargo flights and one-off services. Approximately 6,000 employees have been placed on unpaid leave until June 30. The Israeli flag carrier said the decision was based on continued Health Ministry requirements for self-quarantine upon arrival in Israel, a ban on entry of foreign nationals, and low demand for passenger flights. A week earlier, El Al chief executive Gonen Usishkin warned Prime Minister Benjamin Netanyahu that he will carry the “ultimate responsibility” should the struggling Israeli airline collapse, describing the latest bailout proposal submitted by the government as an attempt to liquidate the company.

Any deal is likely to require severe cost-cutting measures and layoffs expected to affect 2,000 workers, approximately one-third of the airline’s workforce. The cuts will require the approval of the El Al workers' union. The immediate impact of letting the airline collapse, Usishkin wrote, would harm Israel’s national security by ending its aviation independence, risk the livelihood of 10,000 households headed by El Al staff, and 30,000 households indirectly rely on the airline, and cause the loss of national aircraft, more than NIS 1 billion ($280m.) in ticket refunds for passengers, NIS 2.5b. ($710m.) in annual GDP and other national strategic assets.

Also on Tuesday, the IAA’s workers union threatened to shut down Israel’s airports next week if the government does not finalize a date for the renewal of aviation traffic and enable foreign nationals to enter the country again. Initial hopes to increase operations in June have been dismissed in recent days, with Ben-Gurion Airport managing-director Shmuel Zakai now expecting that Israel will only open its gates to foreign visitors in mid-July.“Unfortunately, the Health Ministry has not yet set a date for the return of flights,” the workers union said in a statement, emphasizing that 2,500 IAA employees currently on unpaid leave are set to stop receiving financial assistance on July 1.

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