After $30 million in losses, Arkia faces a battle over who will pay for its rescue
The Nakash brothers intend to inject capital into the airline, but employees are demanding protection against dilution as management considers cost-cutting measures and workforce reductions.
Arkia is facing a need for fresh capital after recording losses of more than $30 million in 2026. Calcalist has learned that the airline’s controlling shareholders, the Nakash brothers, intend to inject additional funds into the company. Employees, who hold a 20% stake, are demanding that the investment be made without diluting their holdings.
The brothers, however, are unwilling to provide additional capital without reducing the employees’ shareholding. Arkia employees previously held 30% of the company, but their stake has already fallen to 20% following earlier capital injections by the Nakash family.
The dispute has escalated into a labor conflict. Yesterday, the Transport and Seaports Workers’ Union sent a letter to Arkia management announcing its intention to initiate industrial action and declare a labor dispute. The union also called for an employee protest against management.
The letter alleges that management, together with Avi Hormaro, is advancing efficiency measures and workforce reductions while simultaneously seeking to dilute the employees’ holdings. The union is demanding that any such measures be taken only in coordination with it.
Hormaro has recently returned to Arkia as an observer on its board of directors, roughly a year after leaving at the request of Avi Nakash. His departure followed a bitter dispute with Nakash, who oversees Arkia under the division of assets among the three brothers, Joe, Rafi and Avi.
The dispute extended beyond the airline. Nakash accused Hormaro of appropriating rights to assets belonging to the group, acting under a conflict of interest and carrying out transactions without authorization. Nakash sued Hormaro for NIS 65 million. Hormaro countered that Nakash was pursuing him personally and had even contributed to the breakdown of his marriage. He also maintained that the holdings he received in the group had been legitimately granted to him by the brothers.
Hormaro has now returned to the company with Avi Nakash’s consent.
The Nakash brothers have also been seeking to sell Arkia, but have so far failed to secure a deal. Several potential buyers, including an ultra-Orthodox investor from New York and a Russian oligarch, held negotiations with the owners, but none resulted in a completed transaction.
The brothers are seeking NIS 170 million for the airline. American investor Elliott Zemel also came close to completing a purchase at NIS 140 million, but those negotiations ultimately collapsed.
Arkia’s losses are attributed primarily to rising fuel prices. Sources in the tourism industry also point to the cost of operating long-haul routes, including flights to Bangkok and New York, which they say have failed to achieve sufficient occupancy.
In response, Arkia said: "Arkia is a private company that does not disclose its financial results; therefore, we do not intend to comment on the figures and data currently circulating regarding this matter. Like many other airlines, Arkia is currently facing a significant rise in fuel costs, alongside challenges stemming from the prevailing security and economic situation. Arkia’s management is acting responsibly and prudently, adjusting the scope of operations to match market conditions, streamlining processes, and exercising rigorous control over the company’s expenses."
