Cash trapped Israeli airline, El Al has received financial life to continue its operation in the aviation sector, with an offering of $107 million by a 27-year-old Israeli, controlling 43% stake in the carrier.
According to thepointsguy.com, since March, the airline has effectively ceased operations. The carrier suspended most commercial flights due to the Israeli border closure and has only operated a handful of repatriation, charter and cargo flights since.
Even before the shutdown, El Al was bleeding cash, having recently invested in a slew of new Dreamliner jets and burdened by a high-cost labour structure.
In order to receive a 75% state-backed loan of $250 million, the government required the airline to hold a public share offering. That offering just happened on Wednesday, and the controlling shareholder is now none other than a 27-year-old religious studies student. (Yes, you read that right.)
But how exactly did this transpire?
Well, let’s back up.
Israeli law requires that the majority owner of El Al be Israeli.
So, what’s the next best thing? Have his son Eli do it. The younger Rozenberg was able enter the fray for El Al with the newly created Kanfei Nesharim Aviation group that offered $107 million for the carrier, according to a Reuters. (The name Kanfei Nesharim is Hebrew for the “wings of eagles,” a biblical reference to how God will supposedly bring the messiah.)
The company then purchased a nearly 43% stake in El Al, taking over from the previous majority stakeholder Knafaim Holdings.
As for where a young religious studies student might get the means to set up a multi-million-dollar holding company, one can only wonder if the funds were from Dad – though The Jerusalem Post notes “father Kenny Rozenberg is said to be behind the purchase.”
Either way, the deal is still awaiting approval from the country’s finance committee, but Eli Rozenberg is expected to meet with the Finance Ministry next week.
According to Globes, he wants to make changes to El Al’s board and invest heavily in improving El Al’s service, especially the onboard food service and operate on-time flights.
But turning around the airline could prove to be even more difficult than it sounds.
For one, El Al’s flagship U.S. routes have seen an incredible amount of new competition during the carrier’s shutdown. American, Delta and United have all used the shutdown as a time to announce and further strengthen their hold on the U.S. to Israel market.
American announced new routes to Israel from Dallas and New York-JFK, Delta is going double-daily on its JFK to Tel Aviv route — including one frequency operated with new Delta One Suites — and United will offer a whopping 23 weekly flights to Israel from its various U.S. hubs.
Increased competition isn’t just limited to El Al’s U.S. routes. European low-cost carriers have flooded the Tel Aviv market in recent years too.
Either way, the Rozenberg ownership marks a new chapter for the Israeli flag carrier. Only time will tell if the Rozenbergs become El Al’s messiah — just as the name of their new holding company implies.
Source: thepointsguy.com
