Arkia Employees Declare Labor Dispute Amidst Financial Woes and Ownership Strife

The Arkia Employees' Committee, through the Transport Workers Union of the Histadrut, has declared a labor dispute with the airline. This action stems from the owners, the Nakash brothers, intending to implement an efficiency plan that includes staff reductions and route cancellations, without reaching agreements with employee representatives. The employees are concerned about potential layoffs, diminished working conditions, and a further decline in the company's financial standing, possibly leading to insolvency.

The declaration follows weeks of conflict, including protests outside the company's offices in Bnei Brak. Arkia, which expanded its operations in recent years with new routes to New York and the Far East, has encountered financial difficulties. Estimates suggest losses have exceeded $30 million since the beginning of the year and could reach $50 to $60 million by year-end. As a private company, Arkia does not publish official financial reports.

The dispute has intensified with the return of Avi Hurumro, who previously managed the Nakash family's businesses in Israel, to a role at Arkia. Appointed as an observer on the board of directors on behalf of the owners, Hurumro has effectively replaced Avi Nakash, who was previously responsible for the company. A past legal dispute between Nakash and Hurumro, involving a NIS 65 million lawsuit, has concluded.

While employees express confidence in CEO Ooz Berlovich, they oppose Hurumro's renewed involvement and accuse the owners of attempting to shift the burden of the company's management failures onto them. Last week, dozens of employees protested the Nakash brothers' plan to inject capital into the company, which they feared would dilute the employees' share of the company's stock. The Nakash family holds approximately 80% of Arkia, with employees holding about 20% through the T.U.T. corporation.

Arkia's board decided on Sunday not to proceed with the capital injection at this time, which would have diluted employee shares, leading to a temporary calm. However, disagreements persist regarding the efficiency plan and the potential sale of the company. Employees claim the Nakash brothers are delaying a potential sale to Israir, controlled by Rami Levy, and that a group of investors led by Yariv Lerner is also exploring a purchase. Additionally, Airport Authority employees are reportedly considering acquiring 15% to 20% of Arkia's shares, though this initiative is in its early stages, and Israir has also cautioned that a deal is not certain.

Arkia has been seeking a buyer for about two years. Previous negotiations with investors, including American-Jewish businessman Eliot Zaml, who offered approximately NIS 140 million for the Nakash brothers' stake, did not materialize. Internal disagreements among the Nakash brothers regarding business management are also reportedly hindering efforts to resolve the airline's situation.

Nir Eizenberg, deputy chairman of the Transport Workers Union, criticized the owners, stating, "If the Nakash brothers no longer wish to hold Arkia, it is time to complete the sale of the company and transfer it to owners who believe in its future. It is inconceivable that the moves led by Avi Hurumro, on behalf of the owners, will leave hundreds of employees and their families in prolonged uncertainty." He added, "Behind the company stand hundreds of employees, families, and an entire passenger public. The Histadrut will not allow Arkia employees to be held hostage by ownership struggles."

The declaration of a labor dispute empowers employees to take organizational actions, potentially including a strike, subject to legal regulations. No strike has been announced at this stage.