Over 95,000 jobs at risk due to Israeli quarantine measures, warns IATA

By EYTAN HALON

JUNE 21, 2020 17:30

Passengers wearing masks push trolleys at the departures terminal at Ben Gurion International Airport, in Lod, near Tel Aviv, Israel. (photo credit: REUTERS) — Passengers wearing masks push trolleys at the departures terminal at Ben Gurion International Airport, in Lod, near Tel Aviv, Israel.

(photo credit: REUTERS)

IATA says the government must consider a package of measures to support Israeli airlines and develop plans to restart the aviation industry.

The International Air Transport Association (IATA) warned that Israel’s continued quarantine restrictions are putting over 95,000 jobs at risk on Sunday, and appealed for “vital” government assistance to be granted to the country’s struggling airlines.

Forecasting a 13 million (55%) decline in passenger numbers this year, the global airline trade association estimates that Israeli airline revenues will drop by $3.2 billion, with a wider impact of $8.3b. on the national economy.

As a result, IATA says the government must consider a package of measures to support Israeli airlines. Citing measures implemented by other states, the association said assistance could take the form of direct financial aid, extensions to wage subsidies and corporate taxation relief, and avoiding increases to airport and air navigation charges.

While financial aid for struggling airlines including national flag carrier El Al is important, IATI also emphasized the importance of swiftly restoring international air connectivity, which has been largely severed since mid-March when the government first blocked entry to foreign nationals.

Considering the aviation industry’s 5% contribution to national GDP and 185,000 jobs directly or indirectly supported by international travel, IATI said continued quarantine measures and shutdown of the aviation industry is putting half of the industry’s total contribution at risk.

It is “essential,” the association added, that the government details a plan to remove quarantine measures and re-integrate the nation into global travel and trade.

“Airlines in Israel are suffering an unprecedented collapse in revenues, and in order to preserve air connectivity, it’s vital that Israel follow the lead of many other governments and provide financial assistance to the industry,” said Rafael Schvartzman, IATA Regional Vice President for Europe.

“Quarantine measures are a huge impediment to a recovery in air traffic. Our latest passenger survey shows that 83% will not travel if a quarantine is in place. Therefore, if the Israeli government is looking to restart the economy, it needs an alternative risk-based solution.”

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El Al CEO Gonen Usishkin has previously warned that the airline will not renew regular operations without securing a government-backed bailout agreement. Despite months of negotiations, El Al and Finance Ministry officials are yet to reach an accord.

According to a new proposal received by airline management earlier this month, the government is willing to offer a $250 million loan to the company, in addition to El Al issuing shares worth $150m., backed by a government guarantee to purchase shares that are left unsold. The agreement ultimately could see the state acquiring approximately 60% of the company’s shares and becoming the majority shareholder.

Dismissing reports that El Al had rejected the proposal on Friday, the airline told the Tel Aviv Stock Exchange that it had “suggested adjustments” to the rescue proposal and that it would continue negotiations with the Finance Ministry.

Any rescue plan is expected to be conditional upon severe cost-cutting measures and layoffs expected to affect one-third of the airline’s 6,500-strong workforce. Should El Al management and Finance Ministry officials reach a deal, it will also require the approval of an Israeli bank, the El Al workers union, the government and the Knesset Finance Committee.

Last week, El Al said it would extend its halt on all scheduled passenger flights to and from Israel until July 31, with the exception of cargo flights and one-off services. Some 6,000 of the carrier’s 6,500 staff are also scheduled to remain on unpaid leave until July 31.