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Corona in aviation: additional assistance to Israeli companies - Walla! Of money

2021-11-21T11:10:51.912Z


Israeli airlines will receive an additional $ 44 million in assistance from the state, in return for the same investment by the owners. El Al will receive most of the amount ($ 30 million)


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Corona in aviation: additional assistance to Israeli companies

Israeli airlines will receive $ 44 million in aid from the state, in return for the same investment by the owners.

El Al will receive most of the amount ($ 30 million).

The assistance - in conversion bonds for a period of three years without interest, at the end of the period, if not a resident of the consideration, the state will win shares

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  • EL AL

  • Arkia

  • Israir

  • assistance

  • Grants

  • Corona

Sonia Gorodisky

Sunday, 21 November 2021, 12:35 Updated: 13:01

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The Ministry of Finance and the Ministry of Transportation have formulated an additional assistance plan for Israeli airlines. According to a joint statement from the two ministries, in view of the exceptional damage to the Israeli aviation industry during the summer months due to the outbreak of the Delta strain, the government approved the Ministry of Finance and Transportation's proposal for an immediate cash flow assistance program to Israeli airlines.



As part of the outline, the state will offer airlines assistance that will be provided by way of conversion bonds into shares for a period of three years without interest.



State aid will be transferred to the airlines in parallel with the transfer of share capital to the airline in an equal amount (ratio of 1: 1). The total amount of state aid to all Israeli airlines will not, in aggregate, exceed $ 44 million.



After three years, each airline will be able to choose whether to repay the bond to the state or convert the debt into shares allotted to the state at a price that reflects a discount on the share price to be determined by the state depending on the conversion date.



The conversion will be made how and only in a situation where the airline will be public and its shares will be tradable.

In any case, the State's share in the share capital of each of the companies shall not exceed 24%.

As long as the state holds the shares, they will be anesthetized so that the state will not participate in the voting as a shareholder but will be entitled to the equity rights attached to the shares.

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(Photo: ShutterStock)

"Significant National Strategic Property"

Finance Minister Avigdor Lieberman

: "The additional aid scheme will allow Israeli airlines to overcome the difficulties the industry has experienced in the last 20 months and strengthen their capital structure.



Minister of Transportation, Merav Michaeli

: "Israeli aviation is a significant strategic-national asset for the State of Israel and has undergone severe upheavals in the past two years. In light of the importance of the Israeli aviation industry, we worked together with the Ministry of Finance "In the various companies.



The outline we have presented will benefit the Israeli public first and foremost and will also ensure the stability of the companies and their employees."

Ben Gurion Airport in early summer, 2021. Despite some recovery in passenger traffic, it is estimated that it will be a long time before the aviation industry recovers (Photo: Reuven Castro)

Danger that the loan will become a grant, if the crisis continues

It should be noted that as early as May 2021, EL AL received approximately $ 210 million in assistance from the state.

The assistance provided then was a kind of loan to be repaid on airline tickets by officials over the coming years.

But this assistance was not enough - and El Al demanded another grant, this time not as a loan.



At the same time, the two other companies, Arkia and Israel, also arose, which they claim were discriminated against compared to El Al.

The state, for its part, claimed that the massive assistance to El Al was provided, among other things, because it cut a third of the company's workforce, about 2,000 employees out of just over 6,000.



Despite the stipulation of aid in the repayment of the bonds or loss of shares, there is of course a danger that the loans will become a kind of grants: if the distress in the industry continues in the coming years, stock.

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Source: walla

All business articles on 2021-11-21

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