Econostrum | Economic News in the Mediterranean



A student takes a majority stake in the Israeli airline El Al

A new owner takes El Al under his wing (photo: F.Dubessy)
A new owner takes El Al under his wing (photo: F.Dubessy)
ISRAEL. Eli Rozenberg, a twenty-seven year old Israeli student of Yechiva (centre for the study of Torah and Talmud) living in Jerusalem, now holds a 42.85% majority stake in El Al Israel Airlines (El Al) via his company Kanfei Nesharim Airlines.

Born in New York, and son of American billionaire Kenny Rozenberg, founder and CEO of the Center Health Care group (retirement homes), he acquired, on Wednesday 16 September 2020 for $150 million (€126 million), a large part of the shares of the public offer placed on the Israeli airline company on the Tel Aviv Stock Exchange, as part of its rescue plan. Eli Rozenberg's offer being the only one that intervened, as planned, the Israeli State thus bought back all the other unwanted shares for about 100 million shekels (24.7 M€) that is between 12 and 15% of the capital, according to the local press.

The previous key to the distribution of El Al's capital was Knafaim Holdings Ltd. (38%), the Ginsburg group (8%) and the Israeli State (54%).

2 bn net debt

With more than $2 billion in net debt and a net loss of $244 million in the first half of 2020, the airline will have to shed 2,000 of its 6,300 employees. The pandemic has led it to put 80% of its employees on unpaid leave - a scheme extended until the end of October 2020 - and to reduce the salaries of its executives and directors by 20%.

El Al accepted, at the beginning of July 2020, the rescue plan proposed by the Israeli government and providing for a loan of $250 million (€221 million) benefiting from a State guarantee on 75% of the amount, in the event of the company's default. At the same time, the sale of El Al shares on the Tel Aviv Stock Exchange was also planned.

"El Al controlled by Kanfei Nesharim Airlines will place particular emphasis on punctuality on all flights, investing in significant resources to improve service and the flight experience for all its customers, and working to improve the food served to passengers in all classes", underlines a press release from the buyer. In this text, he commits to "taking on the great responsibility of restoring passenger confidence, securing the jobs of El Al's thousands of employees and leading the airline towards a secure future".

El Al carried 5.8 million passengers (and 74,500 tonnes of freight) in 2019 and is expected to resume cargo flights from 21 September 2020 and commercial flights on 1 October 2020. The Israeli government has again decreed a confinement throughout the country since Friday 18 September 2020, due to the alarming spread of Covid-19.

Frédéric Dubessy

Friday, September 18th 2020

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