Israeli Government Proposes Partial Compensation Plan for Airlines After Operation Roaring Lion Losses
Following the heavy financial losses Israeli airlines suffered due to flight cancellations, empty flights, and airport parking fees during Operation Roaring Lion from February 28 to June 17, the government has drafted a compensation plan. The draft government decision, obtained by Globes, outlines a two-stage reimbursement scheme covering up to 67% of actual expenses related to empty flights mandated by security restrictions. The first stage offers a 33.5% reimbursement contingent on airlines committing not to distribute dividends for one year. The second stage provides an additional 33.5% reimbursement, conditional on maintaining the dividend ban and requiring shareholders to inject an equivalent amount of equity capital.
This mechanism aims to support airlines facing significant financial difficulties while preventing companies in a strong financial position from distributing profits. Publicly traded airlines El Al and Israir face a dilemma under this plan, as both have recently resumed dividend payments following prior government agreements. El Al, for example, approved a $100 million dividend earlier this year after repaying COVID-19 loans and renegotiating terms with the state. Israir also has dividend distribution rights starting in 2026 under its agreement with the government.
The compensation plan is expected to be presented to the government next week, with airlines able to opt in until the end of November 2026. The total budget allocation for 2026 is up to 55 million shekels, drawn from the civil war expenses budget. This compensation complements another recently agreed plan to reimburse 70% of airport parking fees, which is also subject to similar dividend and equity injection conditions.
Despite these measures, the cumulative losses remain substantial. El Al reported losses of approximately $120 million during the operation, while Israir and Arkia each reported daily losses of about $250,000. No comprehensive plan has yet been formulated to cover these broader losses. Additionally, a compensation framework for passengers remains unresolved due to disagreements between the Finance and Transportation Ministries.
