After recognizing a $115 million gain from the sale of part of the frequent flyer club to Phoenix, El Al Airlines
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Feel comfortable paying off a debt to the state in the amount of 45 million dollars. According to the agreement with the Ministry of Finance, El Al will repay the debt when the company’s goal is to remove restrictions and barriers that were placed on the company as part of receiving the money from the state.
According to the agreement, El Al will repay the debt to the state, which was placed against the allocation of the bonds to be converted into shares, by December 20 of this year. The state will advance payments to El Al for the security expenses, in the amount of 20 million dollars, and will transfer them by December 2022. When El Al will return them to the country by April 1, 2023.
In return for the repayment of the loan, the state will not oblige El Al to raise funds on the stock market and will receive a postponement of the date of the public offering in the amount of 62 million dollars that it committed to, until April 1, 2023. During the next six months, El Al will be able to work to strengthen the capital structure in other ways, when El Al Building on the continuation of the realization of the frequent flyer club deal.
After paying off the debts to the state, Al will still be prohibited from distributing dividends or buying back shares until the end of 2025 (in the years 2026-2028 it will be able to distribute up to 30% of the profits), as well as the restriction on the transfer of the company’s rights in slots, without approval The state in advance and in writing until December 31, 2030, but the other restrictions on El Al will be lifted: adjustment of production capacity through wet leases of aircraft and adjustments in manpower (including – flexibility in the way the manpower teams are operated), updating the company’s route network, investment in the company’s working capital and more.
El Al CEO Dina Ben Tal Gnansia: “In order to create managerial flexibility, among other things, by means of investments in the company’s working capital also in light of the increase in demand, it was agreed between the management of El Al and the Ministry of Finance to speed up the repayment process of the bonds presented to El Al”
In the latest reports, El Al recorded revenues of 516 million dollars, and for the first time since the outbreak of the Corona crisis, it passed to a gross profit. The company’s cash flow amounted to $163 million and the company has cash of $340 million as of the end of June.
El Al did record a profit of 100 million dollars, but this was following the sale of the part of the frequent flyer club, and the recognition of the resulting profit. In neutral it is a net loss in the second quarter of 15 million dollars (this is also an improvement compared to 81 million dollars last year.
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