Israeli carrier El Al is putting another 400 personnel on furlough after the carrier’s pilots chose not to operate a number of the airline’s services.
The airline had been operating a limited number of passenger and cargo services from Israel, although its scheduled passenger flights had been suspended until 31 July.
But it says the “non-staffing” of flights by the airline’s pilots has forced it to cancel remaining services at least until this date.
El Al has been trying to reach an agreement with the Israeli finance ministry for a $400 million loan but requires productivity deals with its employees.
The airline is under increasing financial pressure having recorded a heavy first-quarter loss and it has warned that the loan is crucial to its survival.
Chief financial officer Dganit Palti says the crisis has resulted in a “serious liquidity problem” at the airline.
Palti states that the airline had a substantial cash balance of $264 million at the beginning of the year.
But the burden of debt taken on during the fleet modernisation, as El Al replaced its Boeing 767s and 747s with 787s, has been exacerbated by the slump in the airline’s revenues – down 25% in the first three months.
“The decrease in fuel prices – which in normal times is a blessing – has led to losses in hedging transactions which, at low consumption rates, are in part not recognized as effective,” says Palti.
El Al recorded a charge of $56 million attributed to this situation in the quarter.
It has secured agreements to defer lease payments, and increased its liquidity by arranging the sale-and-leaseback of three aircraft. The company has also sold its stake in logistics firm Maman.