El Al airlines said Monday that the Finance Ministry has rejected its appeal for an emergency state loan of $350 million to weather the coronavirus pandemic.
Israel's flagship carrier is facing financial ruin over the fact that the global pandemic, as well as the government's containment measures, have all but grounded air traffic as a whole.
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The financial fallout from the global coronavirus outbreak has already forced El Al to lay off some 1,000 of its 6,000 employees.
El Al CEO Gonen Usishkin warned last week that the company's situation "worsens with each passing day. ... We're approaching the point at which the state must decide whether it wants a national airline, or whether it believes that aviation security is not an important and substantial element in national security."
In a statement to the Tel Aviv Stock Exchange, El Al said, "Representatives from the Finance Ministry informed the company that for now, the Treasury's team of professionals is not approving the requested aid package. The team said that the political echelon may reverse this decision, prompting the company to turn to the government for assistance.
"State support in the near term is essential to allow the company to cope with the consequences of the coronavirus crisis," the air carrier said.
According to a report in the financial daily Calcalist, Finance Ministry officials believe that the airline's assessment of its return to routine operations and future revenue were unrealistic and have expressed concerns that given El Al's finances, there was a substantial chance it would default on the loan.
The decision on whether to grant the air carrier a bailout now falls to Prime Minister Benjamin Netanyahu.
Late last month El Al suspended all commercial flights. The company said it would continue to operate flights to repatriate Israeli citizens stranded overseas in coordination with the Foreign Ministry and the Defense Ministry, as well as cargo flights.
