El Al merger with Arkia: Employees from both companies oppose the move

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by Ifi Reporter Category:Financial Feb 5, 2022

A day after the announcement of the signing of a memorandum of understanding between El Al and Arkia, it seems that the completion of the move faces significant obstacles. Among EL AL employees, there was unequivocal opposition to the outline of the emerging agreement that would allow Arkia employees to hold EL AL shares. According to the agreement, the merger between El Al and Arkia will be done by an exchange of shares, so Ask Al will acquire full ownership in Arkia in exchange for allocating 10% -14% of its shares after the merger to Arkia owners: the Nakash family (70%) and a strawberry corporation owned by Arkia employees (30%).
The EL AL employees object to the allotment of shares to Arkia employees and their expected tenure on the EL AL board of directors, due to the inherent conflict of interest between their interests as owners and the interests of the company's employees; This conflict of interest can manifest itself when an EL AL workers' committee wants to take organizational action such as a strike, in order to protect its rights.
EL AL employees also resent the fact that they did not participate in the negotiations on the merger, with Avi Edri holding the Histadrut's transport workers portfolio representing the workers, and being one of the factors that pushed for the merger. Were brought to their attention, were not discussed and did not receive their consent.
Others believe that there is no economic logic in the merger - neither in terms of the fleet of aircraft that the company brings, nor in the tourism activity that is allegedly one of the relative benefits that Arkia will contribute to the merged company. According to some of the company's employees, the merger with Arkia was done using the Nakash family's desire to part with its holdings in Arkia as soon as possible, in order to circumvent employment agreements signed with EL AL employees and to exert pressure on them. These are expected to rise and improve with the exit from the corona crisis.
The Arkia Workers' Committee also opposes the merger in its current form. Ten days ago, lawyer Guy Gissin sent a letter to the management of El Al and the management of Arkia. Gissin represents the TOT Corporation, which is owned by Arkia employees, and is headed by Professor Yaron Zelicha. Gissin clarified that Arkia employees prefer to keep the company's shares in their hands, in order to maintain Arkia's operations and stability even after the merger, and to allow the Nakash family to sell its shares.
At the same time, Arkia employees expressed through Gissin an agreement to sell their shares, if they were given alternative mechanisms that would preserve their rights, and not as part of a collective labor agreement but as Arkia owners. Arkia employees appear to be willing to sell the shares but demand that they be retained the right to vote as holders of 30% of the voting shares in Arkia and they also demand that they retain the right to oppose stakeholder transactions and demand that Arkia have minimal capital, which will allow it economic stability and continued activity.
Among Arkia employees, they mention that they did not sign the memorandum of understanding between El Al and Arkia and deny the Histadrut the right to negotiate a merger on their behalf. This is due to the fact that the Histadrut is not authorized to negotiate the private property of the company's employees.

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