A 27 year old U.S. born man, currently a student and son of a New York nursing home chain owner has followed up on a previously announced plan and acquired a 43% stake ($107 million worth of shares) that gives him a controlling stake in Israel’s flag carrier.
The deal still needs approval from parliament’s finance committee and the buyer is going to meet Israels government representatives next week to discuss the matter.
While this is obviously a deal financed by “daddy’s money” and the banks I think this sounds pretty awesome from an aviation enthusiasts point of view if you consider yourself in the position of suddenly owning an airline at 27 years old.
Reuters had a follow up story on this yesterday after the matter was first brought up a few months ago in the height of the Covid-19 pandemic that has grounded El Al.
A 27-year-old U.S.-born yeshiva student has secured control of El Al Israel Airlines ELAL.TA following a public share offering that was a government condition for the carrier to receive a 75% state-backed $250 million loan.
Eli Rozenberg’s newly created Kanfei Nesharim Aviation bought $107 million of shares that would give him a nearly 43% stake in Israel’s flag carrier, his spokesman said Thursday.
Rozenberg, who resides in Israel, is the son of Kenny Rozenberg, chief executive of New York-based nursing home chain Centers Health Care.
The government bought a 15% stake for $34 million while the holdings of El Al’s current owners, Knafaim Holdings KNFM.TA, fell to 15.2% from 38%.
Rozenberg in July had offered to funnel $75 million into the airline in return for a 44.99% stake.
The deal needs approval from parliament’s finance committee. Kanfei Nesharim’s spokesman said Rozenberg will meet Finance Ministry officials next week.
He said once Rozenberg is approved, he will seek to make changes to El Al’s board and elsewhere to move the cash-strapped carrier forward. Kanfei Nesharim said it would invest heavily in improving El Al’s service and to upgrade its food service. …
The airline has reported losses for two years and racked up debt to renew its fleet. In addition to the share offering, the government has required El Al to slash costs.
Most of its 5,940 employees remain on unpaid leave and El Al said it would gradually bring a small number back.
Assuming that the prospective new owner – although born in the U.S. – also has Israeli citizenship is pretty much a given. I’m now familiar with Israels ownership laws for companies of vital importance so not sure if a foreigner could buy a controlling stake of El Al?
The nursing home business in New York City must be going well for the family. Not sure how the most recent developments in the state have impeded that!?
There is an old saying in the airline business: “If you want to become a millionaire in aviation you better start as a billionaire!”. Is it really such a worthwhile idea to get yourself entangled with a notoriously loss making airline in the worst economic climate for aviation in decades?
Conclusion
Israel is currently facing another lockdown due to Covid-19 and the ongoing devastation due to this won’t help to get El Al (or any other airline) back on it’s feet anytime soon.
At the same time Israel and the UAE have recently signed their agreement to normalize and establish formal diplomatic relations including opening of the airspace, allowing each others flights. The presence of Emirates and Etihad in Israel will also eat away from El Al’s profits, making their position even more difficult.
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