Arkia's controlling owners reach deal to sell Israeli airline to investor group

The controlling owners of Arkia, the Nakash brothers, signed an agreement on Thursday with a group of investors that has committed to injecting tens of millions of dollars to take control of the debt-ridden Israeli airline.

Under the terms of the deal, the acquiring investor group will hold a majority stake in the privately held carrier and become its controlling shareholder. The Nakash brothers will keep a minority stake in Arkia, which has been up for sale while reportedly piling up heavy losses over the past year amid a dispute with employees.

The investor group includes businesswoman Einav Adiv-Berar, 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 was announced just 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 push forward efficiency measures, workforce reductions and other moves affecting job security, employment terms and workers' rights.

Employees hold a 22 percent stake in Arkia through a partnership structure that gives them a right of first refusal on material corporate transactions. The infusion of fresh funds into the airline under Thursday's investment deal threatens to dilute that 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." He added: "The Histadrut will not allow Arkia's workers to be turned into hostages of ownership struggles."

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

Since the war with the Hamas terror group erupted on October 7, 2023, foreign airlines have repeatedly halted or reduced their flights to and from Tel Aviv. Local carriers have at times 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.