El Al Israel Airlines (ELAL.TA) said on Thursday it was cutting 1,900 jobs as part of a broader plan to recover from the impact of COVID-19, even as its net loss narrowed in the first quarter due to steep cost-cutting measures.
Israel’s flag carrier reported an $86 million loss in the January-March period, versus a net loss of $140 million a year earlier. Revenue slid 64% to $117 million, while expenses such as salaries and jet fuel dropped 54%.
El Al, which has new ownership and management, has reported losses for three years and racked up debt to renew its fleet. It
suspended scheduled passenger flights in March 2020 at the outset of the health crisis when Israel closed its borders to most foreign citizens, compounding its financial woes.
Following a rapid vaccination roll-out that has led to a steep drop in virus infections — there are just 588 active COVID cases nationwide — Israel has begun to open up some international routes again to its citizens.
Tourists will begin to enter on May 23 on a limited basis since there are still concerns over new coronavirus variants.
With fighting between Israel and Hamas militants in Gaza in a second week, El Al is one of a few airlines flying since some foreign carriers have suspended flights.
“These days we are going through a sensitive security period in which El Al is committed to its role in continuing to provide air travel to and from Israel,” said CEO Avigal Soreq.
As part of a recovery plan mandated by the government to receive a bailout package, Soreq said El Al is laying off 1,900 employees, nearly one-third of its staff, in a process that will be completed in the second quarter.
“This step, along with other measures we are taking, on the financial and operational levels, will lead us to put El Al back on track and … achieve a cash flow balance” in 2021, Soreq said.
Earlier this month, the government approved a bailout package for El Al that has the state covering $210 million of company security costs. El Al also raised $83 million in the first quarter from the sale of options and plans a share issuance of $105 million by July.
On Wednesday, the state gave permission for U.S. businessman Kenny Rozenberg to join his son — 28-year old religious student Eli Rozenberg — in controlling El Al after he became an Israeli citizen. Funded by his father, Eli Rozenberg bought control of El Al last year. read more
Our Standards: The Thomson Reuters Trust Principles.