One of the immediate victims of the coronavirus crisis is El Al Israel Airlines Ltd. (TASE: ELAL). The persistence of the virus is aggravating the damage to El Al's business and threatening its ability to meet its commitments. Another announcement yesterday by El Al revealed the considerable impact of the crisis on the airline's expected business results.

El Al expects a $140-160 million downturn in its revenue in January-April 2020, $80-90 million of this in the first quarter. The company says that the decline will partly be offset by a reduction of its operating expenses. El Al accordingly predicts at this stage that the effect of the decline in its revenue on its results in January-April will be $70-90 million, including $35-45 million in the first quarter.

El Al says that it revised its estimate of the effect of the coronavirus on its financial results because of the decline in its activity in its destinations in Italy and Japan, and because of the Ministry of Health's recommendations on flights to all destinations. El Al has not yet taken into account the effects of the Ministry of Health's instructions for isolation of returning passengers and the ban on entry of foreigners from additional countries: France, Germany, Switzerland, Spain, and Austria. This makes it likely that the airline's losses will continue to worsen.

El Al added that it was "taking operational and financial measures aimed at cutting its expenses and reducing the decline in its cash flow," and was making "significant adjustments in its activity and its network of routes."

The airline also reports measures "in the area of labor relations," following reports that it was laying off hundreds of employees. El Al also stated officially that it had "contacted the Ministry of Finance in order to obtain support from the State of Israel, and was conducting talks to that end."

As far as is known, El Al hopes to receive government aid in the form of a grant. The Ministry of Finance, however, wants to help El Al by reducing its payments to the Israel Airports Authority, and by bringing forward payments for flight security, which are contingent on streamlining measures that include large layoffs and wage cuts.

Against the decline in its revenue, El Al is benefiting from lower global oil prices, and hence lower fuel prices, and lower expenses in other areas as a result of a reduction in its activity. At the same time, the company (controlled through Knafaim Holdings by Tami and David Borowitz) has substantial fixed costs. Among these are purchase and leasing payments resulting from its ambitious procurement of Boeing Dreamliners, salary expenses, and payments to the Airports Authority. All of these expenses must be paid, even when the airline's revenue declines.