Israeli flag carrier, El Al announced that it has decided to accept the Ministry of Finance's plan to save the airline from shutting down.
According to plan, the airline will receive a $250 million bank loan with a 75 per cent state guarantee, along with a $150 million share issue, reports Xinhua news agency.
The state made a commitment to purchase the shares, or 61 per cent of the company.
By doing so, the airline will return to state-owned, 15 years after it was privatized.
Due to the coronavirus crisis, El Al planes were grounded in March, and 5,800 workers were put on unpaid leaves.
The company ended the first quarter of 2020 with a $140 million loss, and the continued sky closure means that it would have no revenue soon.
On Monday, Israel's Minister of Transport, Miri Regev, told the Hebrew-language news website Ynet that "this is the first step in getting El Al back on the runway".
"We are committed to rehabilitate the firm to maintain Israel's aviation independence."