In further blow to El Al, Airports Authority demands millions in back payments
Adding to the troubles of Israel’s struggling national carrier, the Airports Authority has reportedly demanded that El Al pay back tens of millions in fees it owes for office space and parking for its planes at Ben Gurion Airport over the past three months.
The request for immediate payment comes in light of El Al’s failure to pay the fees since February, when international air travel was almost wiped out worldwide in the wake of the coronavirus pandemic, the Ynet news site reported Tuesday.
The Airports Authority, also suffering financially from the crisis, needs the funds to replenish its deflating coffers, the report said.
The demand adds to El Al’s already dire financial situation following losses incurred during the pandemic.
Earlier this month, the carrier warned it was in danger of collapse if bailout negotiations with the government fail, at the same time reporting a loss in the fourth quarter of 2019.
“Given the uncertainty regarding the assistance, which is needed to allow the company to cope with the impact of the crisis at this stage, the company estimates that there are significant doubts about its continued existence as a going concern,” the airline said in a May 14 statement.
Israel currently only allows citizens and residents to enter, and they must undergo a two-week period of quarantine upon their return to the country. Only a handful of flights enter or leave the country daily.
Previous finance minister Moshe Kahlon, who was replaced last week by Likud’s Israel Katz with the swearing-in of the new government, offered the battered airline a lifeline via a $400 million state-backed loan guarantee on condition it agrees to a raft of extensive reforms.
But the loan was conditioned on El Al’s owners injecting NIS 100 million ($28.5 million) into the company and carrying out further restructuring to reduce annual costs by at least $50 million. The airline was also required to repay the government if its value rises after the crisis.
The government offer was criticized by El Al, and it’s unclear whether the airline will accept.
The offer from the Finance Ministry came after a court gave El Al the go-ahead to pull NIS 105 million ($30 million) from its employee pension and compensation fund in order to help cover its costs and avoid collapse. The court ruled that the amount was not owed to employees, and could therefore be used in the company’s current emergency.
With tensions at the airline high after it slashed its workforce by some 90 percent and dipped into pension accounts to stay afloat, the union leadership was suspended by the state’s Histadrut labor federation on Monday after a meeting ended with overturned chairs and spilled coffee.