Arkia and Israir Explore Merger Amidst Challenging Market Conditions

Israir (6H, Tel Aviv Ben Gurion) has entered into preliminary merger talks with Arkia Israeli Airlines (IZ, Tel Aviv Ben Gurion), according to an announcement made to the Tel Aviv Stock Exchange (TASE). The move comes as both airlines face challenges stemming from geopolitical events in Israel, leading to decreased demand for air travel in the region.

Rami Levy, the controlling owner of Israir, is reportedly engaged in early discussions with Israel’s Competition Authority to address potential antitrust concerns that may arise from a merger. Both carriers believe that the current market conditions, impacted by geopolitical events, present an opportune time for a merger.

The two airlines, along with El Al Israel Airlines, are the primary scheduled passenger carriers based in Israel. Israir operates a fleet of six A320-200s, serving 38 destinations in 25 countries. Meanwhile, Arkia, owned 70% by the Nakash brothers, operates two A321-200NXs and three E195s, flying to 16 airports in 14 countries.

Competitive issues that may affect the merger include the fact that Israir and Arkia are the sole operators on the Tel Aviv – Eilat route. Discussions in 2022 between Arkia and El Al regarding a potential merger and transforming Arkia into El Al’s low-cost carrier (LCC) arm did not materialize, as it failed to secure approval from the Israel Competition Authority.

Israir, a subsidiary of Israir Group, is currently 36.7% owned by a holding company called Shai Odem, controlled by Israeli businessmen Rami Levy and Shalom Haim. Levy owns an additional 20.8% of the carrier. Notably, Israir has previously engaged in merger talks with Smartwings (Czechia), a bid that, if successful, would position Israir as Israel’s largest commercial aviation operator.

While these discussions are in the early stages, both Israir and Arkia recognize the need to adapt to market challenges and explore strategic opportunities. As the talks progress, further updates will be provided to meet legal requirements and keep stakeholders informed.