Arkia Airline Faces Ownership Battle Amid Financial Crisis

The future of Israeli airline Arkia is at a critical juncture as its controlling shareholders, the Nakash brothers, have proposed a capital injection that would dilute the stakes of employees, who hold 22% of the company's shares. This move has prompted an immediate threat of a labor dispute and strike action led by Avi Edri, head of the workers' committee.

Amidst this turmoil, a surprising alternative acquisition offer has emerged. On Sunday, a meeting took place between Arkia's CFO, Ran Cohen, and a new investor group led by Gil Damti, CEO of the National Group (part of the National Workers Union), and Shmulik Sosna, owner of the logistics firm Sosna Moving. This negotiation, which has been ongoing discreetly for months with the assistance of Deloitte and the Shelevet law firm, is reportedly valued between $30 million and $40 million.

The Damti-Sosna group's proposal includes a unique recovery plan: leveraging Damti's experience in labor relations to resolve the crisis with the workers' committee, utilizing their logistical and operational capabilities, and tapping into a broad consumer base through the "Shaveh" club, which has 200,000 member households and could serve as a platform for a dedicated customer club.

Arkia is currently facing four main acquisition alternatives. Rami Levy's Israir is favored by the Nakash brothers but faces regulatory hurdles from the Competition Authority. Another group, led by Yariv Lerner, Avi Elkiam, and the Verror family, has the support of the employees. The new Damti-Sosna group offers a solution to the labor crisis and a wide consumer base. Additionally, there is a possibility of a merger with a publicly traded shell company led by businessman Shlomi Fogel. The workers' committee of the Airports Authority is also exploring the option of acquiring control shares from the Nakash brothers.

The company is in severe financial distress. Despite tripling its market share at Ben Gurion Airport to 11% following the departure of foreign airlines, this expansion has come at a high cost. Arkia suffers from a capital deficit of approximately $60 million, has lost about $30 million since the start of 2026, and is projected to end the year with a loss of around $50 million. The crisis has been exacerbated by unprofitable long-haul flights to New York and Bangkok, as well as security and regulatory setbacks, including the freezing of the Dubai route due to Shin Bet demands and the halting of flights to Marrakech and the non-approval of the Tokyo route.

For the Nakash family, Arkia's current value is negligible, and the company is on the verge of insolvency. Their desire for a capital injection or merger with Israir is challenged by two major obstacles: the employees' anger, which could severely disrupt operations, and the Competition Authority, which is unlikely to approve a merger with Israir under the "failing firm" doctrine. The existence of alternative purchase offers, including from Yariv Lerner's group and now the Damti-Sosna group, makes it difficult to prove that Arkia faces inevitable collapse without a buyer, placing it at a critical crossroads in its history. The Nakash brothers have temporarily withdrawn the capital injection plan that would have significantly diluted employee shares.