Israir CEO Confirms Talks to Acquire Rival Arkia

Uri Sircus, CEO of Israir Airlines, has confirmed that the company is in negotiations to acquire its competitor, Arkia. In a letter to employees, Sircus expressed enthusiasm about the potential acquisition, stating that Israir's recent investments in aircraft, a maintenance center in Cyprus, and hotel partnerships have positioned it as a "significant potential acquirer." He believes this move presents an opportunity to leverage the company's existing infrastructure and achieve its strategic goal of flying 3.5 million passengers annually by 2030, up from 1.5 million between January and September of this year. The combined fleet would significantly expand, aiming for 5 wide-body, 10 narrow-body, and at least 4 private jets, effectively doubling the current fleet. Sircus highlighted that acquiring Arkia would integrate their strengths, knowledge, and ambitions, creating a formidable Israeli aviation group capable of competing on price and service with major international airlines operating in Israel. He anticipates significant annual savings in operational costs and the establishment of a truly competitive entity with a combined fleet of 5 wide-body and 15 narrow-body aircraft under the Israeli flag.

Sircus emphasized that the deal is in its "initial examination phase" and its realization is not guaranteed, assuring that any potential merger would be conducted responsibly and transparently, respecting the employees of both companies. He also briefly addressed the current geopolitical tensions, noting a reduction in leased aircraft to mitigate risk and readiness to increase capacity on the US route if needed.

Rami Levy, owner of Israir, commented that the acquisition "will not be simple to approve," citing potential opposition from the Competition Authority. He noted Arkia's financial difficulties, including a $30 million loss this year and existing debts, which could lead to insolvency. Levy stated he is considering the purchase but needs to conduct thorough due diligence and obtain regulatory approval. Globes also reported that El Al is interested in acquiring Arkia, but its chances are considered slim due to expected Competition Authority objections.

Israir recently announced the purchase of an additional Airbus A320-200 for $17 million, which it currently leases. This acquisition is expected to save $3 million annually and increase profitability by $1 million. Arkia's controlling shareholders, the Nakash family, criticized Arkia's CEO, Oz Berlovich, for the company's current situation and stated they are actively exploring various rehabilitation options. Arkia has assured that its operations continue as usual, prioritizing passengers, customers, and employees, and maintaining regular service.