Arkia Airlines Ltd. is planning streamlining measures, which include 80 layoffs, changes in salary costs, and the sale of two planes. Today's board meeting, scheduled to discuss the plan, was broken up by chairman Avi Nakash, who was furious over negative media reports, according to employees.
Nakash owns 70% of Arkia, and its employees own the rest. In a letter to Nakash, Arkia workers committee chairman Yigal Cohen says that the airline will report a $10 million operating deficit in 2012.
Arkia employees told "Globes" that the airline lost NIS 11 million in 2011.
Cohen said that since management presented the expected loss it, "has not taken any measures to draw up a proper work plan for the company, instead taking a policy of 'sit and wait', while unreasonably ignoring the company's condition." He adds, "Despite the company's serious condition, management has not seen fit to immediately initiate a work plan to respond to the company's difficulties. We consider this to be a serious managerial failure, especially by CEO Gadi Tepper. This managerial failure follows other wrong decisions by management and a mistaken business policy, which have brought the company to a dangerous crossroads.
"For example, management has not aggressively and determinedly fought for the Eilat route. As a consequence, the reservations office in Eilat has been closed, and its employees have been crammed into a tiny room, harming both them and the company, because of the great damage caused to the marketing and reservations system in Eilat.
"In addition, in early 2011, the workers committee chairman agreed to the CEO's request for the wet leasing of a plane (in breach of the labor contracts) for six months, after the CEO promised to buy a plane the following year. The promise to buy the plane was not kept, and the CEO increased the wet leasing, without the employees' consent, resulting in the declaration of a labor dispute at the company."
Wet leasing is the hiring of a plane from another airline to operate under the Arkia label.
Arkia's spokeswoman said in response, "The meeting was not broken up, but was halted for lunch." As for the airline's alleged losses, she said that the figures were wrong, and that, as a private company, Arkia did not publish financial data.
Published by Globes [online], Israel business news - www.globes-online.com - on October 18, 2012
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