Israel’s flagship carrier, El Al Airlines, may not survive the Covid-19 crisis, auditors warned.
Issuing its financial report a month-and-a-half late, the airline reported a US$31.5-million loss in the fourth-quarter of 2019 and warned that it faces collapse if it fails to secure a government-backed loan, Israel’s Haaretz reported.
The loss, down slightly from US$31.6 million a year earlier, predates the onset of the coronavirus crisis, which forced Israel’s flag carrier to suspend service in March, Haaretz reported.
El Al said it would publish first-quarter results by June 30 at the latest. Meanwhile, however, its auditors attached a “going concern” warning on the 2019 report, meaning they aren’t confident the airline can survive, Haaretz reported.
El Al has been seeking government loan guarantees since the onset of the crisis, but only this week did the treasury make an offer to guarantee 80% of a US$400 million loan to be provided by commercial banks, Haaretz reported.
The treasury has set tough conditions for the aid that the airline will have trouble meeting.
Foreigners are barred from entering the country and incoming Israelis must self-quarantine, which combined with a global decline in travel has hit El Al hard, leaving it with only its cargo business and occasional rescue flights, The Jerusalem Post reported.
A day before the 2019 financial report was issued, CEO Gonen Usishkin appealed to Prime Minister Benjamin Netanyahu to intervene, Haaretz reported.
“Since uncertainty remains regarding receipt of [financial] assistance, which is essential for the company to cope with the impact of the crisis at this stage, the company believes there are significant doubts about its continued existence as a going concern,” El Al said.