Arkia Airlines Faces Ownership Change Amid Financial Woes and Labor Disputes

The controlling owners of Arkia Airlines, brothers Rafi, Joe, and Avi Nakash, have signed an agreement with a group of investors to transfer majority ownership. This move aims to inject new capital into the struggling airline, which has faced significant losses and sought a buyer. The new investor group will inject tens of millions of dollars and assume control, while the Nakash family will retain a minority stake. Employee ownership will continue within the shareholder structure, though specific financial and ownership details are still being finalized.

The investor group includes businesswoman Einav Adiv-Barar, businessmen Kidan Dahari, Yaron Adiv, and Yariv Lerner, along with Viola Credit. The group expressed confidence in Arkia's future and the Israeli aviation sector, stating their investment is intended to stabilize the company financially, enhance its operations, and ensure its continued service for employees, passengers, and the Israeli economy.

The agreement comes amid a labor dispute. Hours before the announcement, the workers' union and the Histadrut declared a labor dispute due to austerity measures and workforce reductions implemented by management without consultation. Employees have voiced concerns about job security, working conditions, and their rights, particularly regarding potential route cancellations and cost-cutting. They also criticized the lack of clarity surrounding the company's future and ownership structure.

These disputes are particularly significant as employees hold an estimated 20-22% stake in the company. They fear that the capital injection and ownership restructuring could dilute their share, which is a major point of contention. The workers' union had warned of escalation if no understanding is reached. Arkia stated that its operations are proceeding normally, with all flights running on schedule and no impact on passenger services.

Arkia has been experiencing financial difficulties, with reports indicating losses exceeding $30 million since the beginning of 2026, potentially reaching $30-40 million by year-end. These figures are based on economic reports, not official financial statements, as Arkia is a private company. Arkia is Israel's third-largest airline, transporting approximately 1.6 million passengers in 2026, accounting for about 10.5% of traffic at Ben Gurion Airport.

The airline operates domestic and international routes, recently expanding to European and long-haul destinations like New York, Phuket, and Hanoi. It also leases aircraft with crews from foreign companies, increasing operational costs. The Israeli aviation sector has faced additional challenges since the October 2023 conflict, with foreign airlines reducing or suspending flights to Israel, increasing the importance of local carriers.