Arkia Labor Dispute Averted as Owners Halt Stock Dilution Plan
Translated & summarized from Globes by baba
The Nakash brothers, owners of Arkia, have abandoned a plan to dilute employee stock after worker protests, averting a labor dispute. The airline, which lost an estimated $30 million in the first three quarters of the year, is exploring other capital raising options. Israir Airlines is reportedly in talks to acquire Arkia, which is expected to finish the year with a $50-60 million loss.
The story in 5 lines · by baba
- Arkia owners Nakash brothers will not dilute employee stock, averting a labor dispute.
- Arkia employees protested the proposed stock dilution plan last week.
- The airline lost an estimated $30 million in the first three quarters of 2023.
- Arkia is projected to end the year with a loss of $50 to $60 million.
- Israir Airlines is reportedly in negotiations to acquire Arkia.
The Nakash brothers, owners of the Israeli airline Arkia, have decided not to proceed with a plan to dilute employee stock holdings, which currently stand at 20%. This decision comes after dozens of Arkia employees protested the proposed dilution last week. Consequently, the labor dispute that the workers had threatened to initiate will not be activated, at least for now. The company is now expected to explore alternative methods for capital injection.
The union had previously sent a warning letter, threatening labor action if the company proceeded with its plans. Their concerns focused on the alleged lack of sufficient capital infusion and the promotion of efficiency measures that could harm employees. The union expressed fears that the company's management intended to shift the burden of mismanagement onto the workers, stating that employees would not accept infringements on their rights, job security, or status. They vowed to prevent unilateral decisions made without employee consultation and to protect long-standing achievements and rights.
Despite the averted stock dilution, Arkia continues to face significant financial difficulties. The airline reportedly lost approximately $30 million in the first three quarters of the year and is projected to end the year with a total loss of $50 to $60 million. In related news, Israir Airlines was revealed last week to be in negotiations to acquire Arkia, with El Al and private groups also reportedly interested in a potential takeover.
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