Eli Rozenberg and the El Al team certainly have their work cut-out: El Al reported a net loss of $531 million, while revenue fell 70% year-on-year to $623 million. The Israeli flag carrier’s latest report shows cash held by the company has fallen by 70% over the past financial year to less than $70 million and that El Al was already carrying accumulated losses of $112 million for 2018 and 2019.
El Al’s auditors attached “going concern” status to the financial reports, stating that the ability of the company, to meet all its financial obligations depends on events that the company does not have full control over. No surprise there.
As with all airlines, El Al is trying to match expenditure and cash flow while looking at all options to raise capital. El Al had already signed a financing agreement with the Israeli state for $210 million, which was in fact an advance on purchasing tickets for the aviation security staff. Even so El-Al have to keep services running to see that money in full and it is not really government assistance as many would see it.
The fact of the matter is that El Al requires government aid and a re-nationalisation may be required. In that event, one would expect Eli Rozenberg to lose a great deal on his investment.
The question is whether El Al can survive without the Israeli state at the very least putting it on a level footing and clearing its debts. Now for the first time in its history, El Al will have to compete with the likes of Emirates and FlyDubai and others in the region, not to mention the already rapidly growing spectre of Ryanair and easyJet chipping away at the holiday traveller market.
El Al is heavily reliant on the US market and its core LHR routes. It would help El Al greatly to be a part of Oneworld and an alliance with American and BA/IAG would do more for El Al than anything else. El-Al moved quickly in 2020 to tie-up with new friendly neighbours to secure its future in a more meaningful way with the GulfAir codeshare and the Etihad alliance agreements. It was hoped that new holiday routes out of Manchester would work well for the airline, but it is hard to compete with the package holiday deals and branding of BA, Ryanair, easyJet and others. El Al, rather like Air Malta, is caught in the centre of very heavy competition from all sides caused by the government opening-up to a litany of powerful airline brands (not that that is a bad thing). El Al will stabilise as Air Malta did. But, like Air Malta, the flag carrier needs government assistance as well as underpinning its core base and that really does mean that the airline needs to focus on fully-integrated holiday packages with good government advertising behind it – and it needs government help here and now. Joining Oneworld and getting far closer to American and BA would be a good move but El Al has tried over the years and it has proved to be far from easy.