Arkia Owners Warn of Share Dilution Unless Employees Join Funding Round

Arkia’s Nakash owners warned on Tuesday that employee shareholders could see their stake reduced if they do not join a fresh capital injection. The warning appeared in a letter sent on the owners’ behalf after workers protested against proposed changes to the airline’s financing and employment arrangements. The owners said the airline urgently needs additional equity and could approach insolvency without another investment. Their letter, sent through attorney Ofer Shapira of Shibolet, argued that shareholders should contribute in proportion to their holdings. It said a state grant requires matching investment and that additional financing also depends on equity rather than loans. Those financing conditions were presented as the owners’ account. Employees hold about one fifth of Arkia through their holding company, Tut. They oppose further dilution and say restructuring could weaken both their employment rights and their influence before a possible sale. The owners maintain that shareholders can preserve their percentage by taking part in the funding round. Workers demonstrated outside the airline’s offices earlier Tuesday and threatened a labor dispute and strike if the disputed measures continue. Their union demanded that restructuring and dilution be frozen before negotiations, while saying it remained open to talks. The reports did not confirm that a strike had begun.