El Al Warns It Will Imminently Collapse; Plans To Fire 1,000 People Due To Coronavirus Losses

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Israel became the first country on Wednesday to advise its citizens to halt all unnecessary travel abroad in light of the recent alarming spread of the coronavirus in countries outside China, including South Korea, Italy, Germany and other European countries and the first case diagnosed in Latin America in Brazil.

“If you don’t genuinely have to fly – don’t do so,” Israel’s Health Ministry said.

Following the Health Ministry’s announcement, El Al airline stated that Israel’s unprecedented warnings and restrictions against travel due to the coronavirus – stricter than any other country – will bring it and other Israeli airlines to financial collapse.

“It’s a catastrophe,” an El Al official told Kan News. “The airlines here will collapse within weeks. El Al sustained damage of $50 million (NIS 200 million) from the coronavirus even before the Health Ministry announcement. If the state doesn’t wake up there won’t be an airline here in a matter of weeks.

El Al and other Israeli airlines also told Channel 12 News that they were not warned in advance about the Health Ministry’s announcement.

Even before the Health Ministry’s announcement, El Al warned last week that the airline is estimated to lose $50 million in wake of the coronavirus crisis.

“There are difficult days ahead and it is possible that we will be required to take dramatic steps and make painful decisions,” El Al CEO Gonen Usishkin wrote in an email to company employees.

Meanwhile, El Al Airlines is formulating a plan to fire around 1,000 employees, nearly one-sixth of its workforce, due to financial losses caused by the coronavirus outbreak. Gonen Usishkin, the company’s CEO, wrote in a letter Thursday to senior executives: “In light of recent developments and the decrease in activity, I am instructing the VP of human resources to formulate a plan to reduce the company workforce by 1,000 people.”

The loss of Chinese tourism alone was a major financial hit being that China is the world’s largest tourism market for outbound travel and the situation has only gotten as more and more countries have been affected by the virus.

El Al notified the Tel Aviv Stock Exchange (TASE) last week that its first-quarter revenue will be $30 million lower than the projected amount due to canceled flights and decreased new bookings in wake of the worldwide coronavirus panic.

The Health Ministry advised its citizens to reconsider all foreign travel. It also ordered its citizens to avoid travel to Italy and said anyone returning from there would be required to enter home quarantine for 14 days. That rule will take effect on Sunday.

On Thursday, Israel’s Interior Minister said that Italian nationals will now be banned from entry to Israel. “We have no choice as the virus has spread in Italy.” Later on Thursday, after an Israeli man who was recently in Italy was the first Israeli to be diagnosed with the coronavirus who was not in quarantine, Health Ministry Director Moshe Bar Siman-Tov said that the self-quarantine orders will now retroactively apply to anyone who has been in Italy in the past 14 days.

In a statement, the ministry said people should “consider the necessity of traveling abroad in general, in addition to the requirement for people to go into isolation (quarantine) when returning from certain countries.”

It also urged people to avoid international conferences.

Israel has already canceled all flights to and from China and mandated 14 days of home quarantine for travelers from a number of Asian countries.

The outbreak has infected more than 80,000 people globally and killed more than 2,700.

(YWN Israel Desk – Jerusalem & AP)




3 COMMENTS

  1. Will the CEO etc take salary cuts? A smart well-run company anticipates the problems and explores creative solutions to remain viable and survive the storms. That they didnt anticipate the Health Ministries instructions is ridiculous. THey should have preempted it by creating a solution and coordinating with the government including the Health and Education ministries. Instead of wasting time sitting with the travel agents who are vested partners, They should have sat with epidemiologists to work out safe travel that will minimize risk of the Corona virus. I know many people who are sorely disappointed by the travel ban and would travel if safe measures can be explored- even if it means respecting the two week quarantine using their sick days from work. It is doable but requires work and planning.

  2. If they don’t hurry up, they won’t be the FIRST airline to go broke due to CORVID 19 messing up world travel. It seems many will crash (financially, that is), and will probably need bailouts. I doubt airlines bought insurance against a collapse in international air traffic due to disease.

  3. Not always are there solutions!
    This is where government bailouts make sense. There is nothing the company did wrong. It’s not mismanagement. It’s no different than the government getting involved in rebuilding efforts after a devastating storm or other natural disaster.
    The ceo did not create the problem nor is it his fault.
    The fact that you know a few people who would fly and self quarantine does not mean it would be financially viable to operate those routes.