Israeli airline El Al signs deal for $130 million loan -Breaking
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© Reuters. FILE PHOTO – The Israeli flag carrier El Al, carrying U.S. and Israeli delegates, lands at Abu Dhabi International Airport on August 31, 2020. WAM/Handout via REUTERSJERUSALEM, (Reuters) – El Al, an Israeli cash strapped airline said Tuesday that it had signed a non-binding agreement for a $130million loan from Phoenix Group.
The interest rate for the loan will be 5.5% to 7.7%, according to Israel’s flag carrier. However, final details are still being worked out by Tel Aviv.
El Al will use its Matmid frequent-flier club as collateral to the loan. Phoenix can purchase 25% Matmid before the end 2027.
El Al sales plunged due to the restrictions that were imposed in the aftermath of the COVID-19 pandemic. Israel recently granted visas to tourists from abroad, which allowed El Al to reduce its loss to $110million in its fourth quarter compared to the $140 million it had incurred a year ago.
El Al lost a third of its workforce as part of a bailout program. The government also required El Al to reduce its fleet. El Al received a $210 million state aid package in 2012. El Al also had to raise more money for the airline by either selling Matmid’s stake or using Matmid collateral.
Both parties must reach an agreement within 90 days. El Al cannot take out any additional loans.
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