Eli Rozenberg has officially assumed control of El Al after the Israeli government granted him permission last week. However, the process was not smooth, with many within the airline fighting against the takeover. The sale is now complete, but not without conditions.
Controversy over actual control
After a protracted sale process, Eli Rozenburg, a 27-year old yeshiva student, assumed control of El Al this week but not without some controversy. A few weeks ago, El Al board members wrote to the Israeli government asking them to reconsider Mr. Rozenberg’s bid on the grounds that he was a proxy for his father, Kenny Rozenberg, a non-Israeli citizen.
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Being an Israeli citizen and resident is a pre-condition to purchasing El Al, the country’s flag carrier. However, many have accused of Eli being a “straw man” for his father, an American, who would actually control the company behind the curtain. The charge has been led by El Al’s board and previous controlling shareholder, Knafaim Holdings.
Sale finally complete, with strings attached
The government rejected El Al’s claims and awarded permission to Eli Rozenberg, clearing the way for him to assume control. However, there are still some strings attached to ensure he indeed is the one running the airline, according to Haaretz.
Mr. Rozenberg can only appoint a CEO and Board members who have at least five years of experience in business, public service, or aviation. Kanfei Nesharim, the controlling company, also cannot take on more debt in the future beyond its current loans without government permission. This could complicate efforts to invest more in the debt-heavy carrier which is struggling due to the pandemic.
These measures do indirectly address the previous management’s concerns over the real ownership of the airline. While Kenny Rozenberg has funded a part of Kanfei Nesharim, he does not have the right to any shares and he or his associates cannot serve on the board.
Eli Rozenberg can sell his shares, provided no buyer owns more than 5% of the airline without government permission. He also cannot use his El Al shares as collateral for a loan, a common practice, which means he may struggle to raise more capital in the future. While these conditions are onerous, Eli Rozenberg is ready to start working on the flag carrier.
Work on the airline to start
With all procedural hurdles now cleared, the new owner can now start working on reviving the carrier. In the coming weeks, a new CEO, management team, and Board will be appointed to run the airline. El Al has already resumed passenger flights to a handful of destinations such as Greece and New York. Cargo flights, which have vital during the crisis, have also restarted operations earlier this month.
Now begins the hard for part of Eli Rozenberg, as he tries to navigate the struggling carrier through the current crisis. While it seems like a herculean task, there are still many opportunities for the airline in the near future, setting up a critical next few months.
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