El Al seeks approval to raise capital as pilots object to cost-saving pact
El Al has called a shareholders’ meeting for 18 August in order to seek approval to raise the company’s registered share capital.
The Israeli flag-carrier is planning to raise $400 million through a $150 million share issue and a state-backed staggered $250 million loan.
El Al says that, in order to issue the shares, an amendment to the company’s articles of association, to hike the registered capital, is necessary.
Its capital currently stands at 1 billion shares plus a special state share. El Al says it wants approval to increase this by 500 million shares, to 1.5 billion.
The airline says it is holding discussions with the ministry of finance on the terms and conditions for the funding, adding that the government will undertake to purchase, at the average May price, any shares not taken up by the public.
If the government takes shares they will be placed with a trustee whose role and powers have yet to be decided.
But El Al says the conditions for the financing scheme will include restrictions on the use of the funds, and a prohibition on dividends, until the loan is repaid.
Another condition requires the airline to improve its efficiency by reaching collective agreements with personnel.
But while it has achieved new pacts with cabin crew, maintenance and administrative personnel, a deal signed for the pilot sector is causing friction because it was signed in the absence of pilots’ representatives.
The airline’s pilots have turned to the labour court in Tel Aviv in a bid to block the agreement, aimed at saving over $100 million, signed with the trade union organisation Histadrut.
El Al says its pilots’ committee has filed an urgent request to the labour court against the airline and Histadrut, seeking a ruling that the agreement – made without fair representation – is “invalid”.