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Cash-Strapped El Al Israel Airlines Raises $148 Million

TEL AVIV, Sept 16 (Reuters) – Cash-strapped El Al Israel Airlines raised $148 million in a government-mandated share offering on Wednesday that will enable it to receive a state bailout package.

In a regulatory filing in Tel Aviv, Israel’s flag carrier said it sold 753.35 million new shares at 0.671 shekels ($0.1963) each.

Its stock earlier had closed 5.6% higher at 0.774 shekel.

Demand reached 654 million shekels while El Al accepted 505 million shekels ($148 million) worth.

El Al did not give further details of the offering which took the total number of shares outstanding to above 1.2 million.

But Israeli media reported that Eli Rozenberg had obtained a controlling stake via the offering, with 44.9% of the airline’s shares. He is the son of American businessman Kenny Rozenberg, CEO of New York-based nursing home chain Centers Health Care.

Rozenberg in July had offered to funnel $75 million into the airline in return for a 44.99% stake.

An El Al spokesman said he could not immediately confirm the reports about Rozenberg’s bid.

Newspapers said the state’s overall stake would now be as much as 15.5%, while the current controlling shareholder – Knafaim Holdings – would see its stake fall to about 15%.

Israel’s Finance Ministry said it paid $34 million for its shares and that although it pledged a $150 million safety net, it was barely needed.

“The results of the offering express investors’ trust in the company’s business plan and in state aid,” it said in a statement.

El Al has been hit hard by the coronavirus outbreak and the government has for months offered to intervene to help it avoid bankruptcy.

That has included mandating a share offering and steep spending reductions to receive a $250 million loan that will be 75% backed by the government and used partly to pay back customers whose flights were cancelled.

The airline has reported losses for two years running, racked up debt to renew its fleet, and suspended flights when Israel closed its borders and furloughed most of its employees.

($1 = 3.4185 shekels) (Reporting by Rami Ayyub and Steven Scheer; Editing by Andrew Cawthorne)

Atlas Air Lands El Al As New Customer

El Al Israel Airlines is outsourcing operation of its main freighter route between Tel Aviv and Liege, Belgium, to Atlas Air Inc. under an extended charter arrangement.

Atlas, an aviation services company headquartered in Purchase, N.Y., said Tuesday it is leasing El Al a Boeing 747-400 all-cargo aircraft, operating it with its own crew and providing maintenance and insurance (ACMI) beginning this month. 

El Al, a new customer for Atlas, is experiencing strong growth in demand across its freight network, according to the announcement. The Israeli carrier sells the space on the plane and covers expenses such as ground handling, landing fees and fuel. 

No terms of the commercial cooperation were disclosed, but ACMI deals typically run for one to three years.

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https://finance.yahoo.com/news/atlas-air-lands-el-al-164407972.html

Image from Pixabay

Israel & Boeing Sign Reciprocal Spending Deal

JERUSALEM (Reuters) – Boeing (BA.N) has agreed to spend billions of dollars in Israel over the coming decade if it wins major defense contracts, Israel’s Economy Ministry said on Tuesday.

The “reciprocal procurement” agreement calls for Boeing to collaborate with Israeli industries for at least 35 percent of the value of any transaction it signs with the Israeli government.

This could ease concerns in Israel over new requirements in a U.S. aid package that divert funds away from local industries.

Boeing is competing in Israel for a number of key Defence Ministry contracts, including the purchase of additional F-15 aircraft, fueling planes and a squadron of transport helicopters, the ministry said.

With Israel expecting to make about $10 billion of military purchases from Boeing over the next decade, the agreement with the U.S. aerospace company means $3.5 billion in new business in Israel, the ministry said in a statement.

“A reciprocal procurement agreement of this magnitude is a significant achievement that will lead to the growth of many companies in the economy, increase their activity and also their success in international markets,” said Economy Minister Eli Cohen.

Under a defense aid deal signed in 2016 by Israeli Prime Minister Benjamin Netanyahu and then U.S. President Barack Obama, the United States agreed to provide Israel with $38 billion in military assistance over 10 years.

However, one component of the deal was to phase out a special arrangement that had allowed Israel to use 26.3 percent of the U.S. aid on its own defense industry instead of on American-made weapons. All the aid will now have to be spent on U.S. equipment by 2026.

(Reporting by Ari Rabinovitch; Editing by Adrian Croft)

Israel’s Elbit Systems Speeds Up Drone Race

REHOVOT, Israel (Reuters) – Israeli defense firm Elbit Systems on Thursday unveiled a 1.6 ton unmanned aircraft vehicle (UAV) designed to fly in airspace currently reserved for piloted civilian planes as a race heats up to deploy military drones outside combat zones.

The move came hours after a U.S. rival staged a landmark transatlantic demonstration flight, as arms firms vie to develop drones with flexibility to be used in civilian-controlled airspace – a drive that could spawn future technology for unmanned airliners.

Changing security concerns following the dismantling of Islamic State and rising geopolitical tensions have caused European countries to shift defense efforts from far-away conflicts to homeland security, resulting in demand for drones that can be safely integrated into civilian airspace to, for example, monitor border crossings, Elbit officials said.

A version of Elbit’s Hermes 900 StarLiner is being assembled for the Swiss armed forces and is scheduled to be delivered in 2019 in a deal worth $200 million.

“We are getting a lot of interest from other customers for the same configuration … from all over the world,” Elad Aharonson, general manager of Elbit’s ISTAR division, told Reuters.

The StarLiner, being launched ahead of next week’s Farnborough Airshow, is derived from the Hermes 900 operated by Brazil for surveillance during the 2014 World Cup. That operation required closing off airspace to civilian aircraft, something the StarLiner, with technology to detect aircraft and avoid collisions, will not require, Elbit said.

The drone is compliant with NATO criteria, qualifying it to be integrated into civilian airspace, Elbit said. It will still need approval of the various civil aviation authorities.

The StarLiner has been flying in civilian airspace in Israel over the past year.

California-based General Atomics’ MQ-9B SkyGuardian – a version of the widely used Predator family – completed its Atlantic crossing on Wednesday ahead of the world’s largest military airshow at RAF Fairford in western England.

Elbit expects to receive approval from the European Aviation Safety Agency (EASA) for its own product in the coming months.

EASA was not available for comment.

Israel’s drone exports in 2005-2012 totaled $4.6 billion, according to consultancy Frost & Sullivan. They reached $525 million in 2016, accounting for 7 percent of Israel’s defense exports, defense ministry data show.

Drones are a major source of revenue for Elbit and state-owned Israel Aerospace Industries. The United States and Israel dominate the industry but face growing competition from cheaper Chinese drones.

U.S. military drone makers are vying for a larger share of the global market, which market researcher the Teal Group forecasts will rise from $2.8 billion in 2016 to $9.4 billion in 2025.

INTELLIGENCE GATHERING

Flying alongside airliners would expand the horizons of drones originally developed for military surveillance. But it would also call for advanced sensors and software that could eventually filter back into commercial use as developers look at single-pilot and ultimately pilotless cargo or passenger jets.

The StarLiner can reach 30,000 feet – the altitude of some commercial jets – and photograph an 80 square kilometer (31 square mile) area, Elbit said.

“Some customers would like to use the system to gather intelligence,” Elbit CEO Bezhalel Machlis said. “Another example can be for homeland security applications, to fly above an area and make sure it is monitored against terrorist activities.”

The drone can be equipped with radar, cameras to take video and still pictures, and signals intelligence to analyze electronic signals.

“This is a major step towards unmanned civilian planes,” Aharonson said, adding the main barrier to such aircraft would be psychological rather than technical.

(Editing by Jonathan Weber, Tim Hepher and Mark Potter)