While foreign airlines continue to reduce operations in Israel, and the industry is grappling with ongoing uncertainty, a battle is underway behind the scenes for control of Israeli carrier Arkia Airlines. It now appears that talks to acquire the airline have broken down after reaching an advanced stage.
A group of investors led by US businessman Elliot Zemel had been conducting advanced talks to acquire control of Arkia from the Nakash brothers. As part of the process, it is claimed, memoranda of understanding (MoUs) were signed between the parties, and the group even invested about NIS 1 million in due diligence, and a letter of commitment for a deal worth NIS 140-146 million was signed between the parties.
This morning (Thursday), the group sent a warning letter before filing a lawsuit against the Nakash brothers, demanding that the deal be completed – or that it receives compensation of NIS 20 million.
In the warning letter, the group claims that the Nakash brothers violated the understandings between the parties, inter alia, by conducting contacts with additional buyers in parallel with the negotiations, despite a no-shop period that was, they claim, stipulated in the agreements.
It is also claimed that the group completed a full due diligence at its own expense, agreed to the terms of the deal, and was even required to pay $2 million as a seriousness fee. Despite this, it is claimed, the deal was not completed.
In the letter, the investor group demands that the Nakash brothers cease contacts with third parties and complete the deal. If the demand is not met within five days, it intends to file a lawsuit in court.
The warning letter also indicates that during the meeting between the parties, it was claimed that the Nakash brothers had a higher alternative offer, amounting to about NIS 180 million.
Investor from outside the aviation industry
Zemel is a lawyer by training, holds a doctorate in business law, and most of his business activity has so far focused on healthcare and investments outside of aviation.
Zemel serves as a managing member of the Koze Investment Group, and last year was appointed a director of the American cannabis company CannaPharmaRX. Despite his financial background, Zemel has no known experience in the aviation sector – a fact that raised eyebrows in the industry already in the early stages of the negotiations.
Zemel was previously a partner in operating a nursing home in California, South Pasadena Care Center, against which civil lawsuits were filed alleging failures in the care of residents.
A challenging period for Arkia
The attempt to sell Arkia is taking place during a challenging period for the airline, which is suffering losses of tens of millions of dollars during the war and is simultaneously waging a legal battle against Wizz Air’s establishment of an Israeli hub.
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Along with the business challenges, any deal to sell control of Arkia must also meet regulatory conditions, primarily the need to include Israeli investors – due to restrictions on foreign holdings in local airlines.
Negotiations began in late 2025 for the acquisition of Arkia by Zemel as part of a group of investors. According to sources involved in the deal, the move was intended to inject capital into the company, strengthen its international operations and prepare it for future growth steps and even for a potential IPO.
According to a source familiar with the details, the investors were identified by Arkia employees who are affiliated with the T.T. Corporation – the Aviation and Tourism Employees Corporation, which holds more than 22% of the company’s shares. Within Arkia’s structure, employees enjoy a significant position in the decision-making chain, including the ability to influence material transactions. It was the T.T. negotiation team that led the talks between the Nakash brothers and the investor group.
Nakash: We vehemently reject the allegations
Adv. Gadi Ouzan of the Shibolet & Co. law firm, representing the Nakash brothers, said, “The Nakash brothers vehemently reject the allegations made in the letter sent on behalf of Elliott Zemel, both from the factually and legally. “The Nakash brothers will continue to act in the best interests of Arkia, its employees and customers, and will not discuss matters concerning the company in the media.”
Published by Globes, Israel business news – en.globes.co.il – on March 19, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.
