Arkia Stakeholders Clash Over Capital Injection Amid Financial Woes
Translated & summarized from Calcalist by baba
The Nakash brothers' holding company, Knafayim, is threatening to dilute the stakes of Arkia shareholders, including employees, who do not participate in a required capital injection. Arkia needs funds to secure a government grant and avoid insolvency, with the state conditioning its aid on shareholder investment. Employees, who hold about 20% of Arkia, are protesting the move, fearing it's a tactic to reduce their influence ahead of a potential sale. They have threatened to strike if the Nakash brothers proceed.
The story in 5 lines · by baba
- Arkia's majority owner threatens stake dilution for shareholders not contributing to a capital injection.
- The airline needs funds to secure a government grant and avoid insolvency.
- Employees, holding 20% of Arkia, oppose the capital injection, fearing dilution and a company sale.
- Employees have threatened to strike and declare a labor dispute if the Nakash brothers proceed.
- Arkia has lost over $30 million since the start of 2026 due to rising costs and security impacts.
Aviation Holdings Group, the entity through which the Nakash brothers hold shares in Arkia, has warned that shareholders who do not participate in a required capital infusion may face dilution of their stakes. This statement comes in response to employee claims that the Nakash brothers' investment aims to sideline workers and reduce their shareholdings. In a letter sent Tuesday by the company's legal representative, attorney Ofer Shapira, it was stated that Arkia urgently needs significant funding, partly to secure a government grant. Without additional investment, the airline could face insolvency.
Knafayim, the holding company, explained that the state is conditioning an immediate grant to Arkia on an equivalent investment from shareholders. Therefore, all shareholders, including employees who own approximately 20% of the company through their corporation, "Tuth," are required to contribute. The company also noted that further financing is contingent on equity investment, not loans.
The letter asserts that "Tuth" opposes the capital injection but is unwilling to fund the company, prioritizing its own stake maintenance over the company's welfare. Knafayim warns that this stance could lead to the dilution of "Tuth's" holdings, and consequently, the employees' shares, if they do not participate. The company argues that "Tuth's" actions violate shareholder duties under the Companies Law. Knafayim invited shareholders to contribute their proportional share to prevent dilution.
The dispute arises amidst Arkia's challenging financial situation, having lost over $30 million since the beginning of 2026 due to factors like rising fuel costs and the impact of the security situation on aviation. The Nakash brothers, who own 80% of Arkia, wish to inject more capital. However, employees, whose stake has decreased from about 30% to 20% following previous injections, oppose further dilution, alleging the Nakash brothers' goal is to push them out ahead of a potential company sale.
Employees protested outside the company's offices on Tuesday, vowing to declare a labor dispute and halt operations if the Nakash brothers proceed with their plans.
