Arkia’s controlling owners sign deal to sell airline to group of investors

The Nakash brothers, Arkia’s controlling owners, on Thursday signed an agreement with a group of investors committing to inject “tens of millions of dollars” to take control of the debt-ridden Israeli airline.

Under the terms of the agreement, the acquiring investor group will hold a majority stake in privately held Arkia and become its controlling shareholder. The Nakash brothers will retain a minority stake in Arkia, which has been on the block, while reportedly racking up steep losses over the past year amid a dispute with employees.

The acquiring investor group includes businesswoman Einav Adiv-Berar and owner of medical centers, including TLV Medical Center; real estate entrepreneurs Kidan Dahari and Yaron Adiv; and Negev Group co-owner Yariv Lerner.

“We believe in Arkia and in the Israeli aviation sector,” the acquiring investor group said. “Our investment is intended to stabilize the company, strengthen its operations, and ensure its continued activity for the benefit of its employees, passengers, and the Israeli economy.”

The agreement came hours after Arkia employees declared a labor dispute alleging that the airline’s controlling owners were taking unilateral steps ahead of a potential sale to advance efficiency measures, workforce reductions, and other moves affecting job security, employment terms and their rights.

Employees hold a 22 percent stake in Arkia through a partnership structure that grants them a right of first refusal on material corporate transactions, with the injection of fresh funds into the airline as part of the investment deal announced Thursday threatening to dilute their stake.

“If the Nakash brothers are no longer interested in holding onto Arkia, it is time to complete the sale of the company and transfer it into the hands of owners who believe in its future,” said Nir Eisenberg, deputy chair of the Transport Workers Union. “It is unacceptable that the moves on behalf of the controlling shareholders leave hundreds of employees and their families in prolonged uncertainty.”

“The Histadrut will not allow Arkia’s workers to be turned into hostages of ownership struggles,” added Eisenberg.

Arkia said in response that its operations were continuing as usual.

“All flights are operating according to the scheduled timetable, and at this stage, there is no impact on the company’s operations or the service provided to passengers,” the airline said.

Arkia, which is Israel’s third-largest carrier, operates domestic flights and routes to major European cities. Over the past year, the airline significantly expanded its long-haul destinations, including New York, Thailand’s Phuket and Vietnam’s Hanoi, despite a challenging period for the aviation sector. Most flights ostensibly operated by Arkia use aircraft leased, along with crews, from foreign airlines. In July, 70 percent of Arkia’s flights were operated through costly wet lease arrangements.

As foreign airlines have repeatedly halted or reduced their flight operations to and from Tel Aviv since the war with the Hamas terror group on October 7, 2023, local carriers have been the only ones reliably flying in and out of Israel, a fact that has been critical to maintaining the country’s air bridge to the world.

Times of Israel staff contributed to this report.