The Nakash brothers – Avi, Joe and Rafi – who made their first fortune with the Jordache fashion chain, currently own about 70 percent of Israel’s Arkia Airlines, 50 percent of the Ampa real estate and financial group, the lease and management rights of the Port of Eilat, and dozens of hotels in Israel and abroad, including the Orchid, Herbert Samuel and Setai chains. Coincidentally – or perhaps not – all of their holdings in Israel are directly affected by the ongoing war and tensions with Hezbollah and Iran.
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Avi Nakash
(Photo: Tal Shahar)
Avi, let’s start with Arkia. You and your brothers control the airline that is currently under fire for raising ticket prices during security tensions and taking advantage of the fact that foreign airlines have suspended flights, leaving you with virtually no competition.
“If I sell a ticket to Athens for $80, even though my costs are $140-150, nobody comes and tells me, ‘Maybe we’ll refund Arkia’s money.’ There are also times when we lose money. When foreign airlines canceled flights and demand was huge, we sold tickets for two days for $800, instead of the usual $250 in peacetime. El Al sells an economy ticket to New York for $4,000-5,000, while such a ticket costs $1,000 in peacetime. So why is nobody talking about El Al?”
Although El Al has also benefited from its monopoly position, this is not appropriate.
“Let El Al do what it thinks is right. It is a free market. A flight is not bread that you have to eat to survive. That is why its price should not be fixed. When people want to travel or return from a trip, they pay what is necessary. During the war, everyone sold according to need.”
These are people who were stranded abroad and would not have agreed to such a deal in advance if they had known about it. And this at a time when the price of jet fuel, the main component of flight costs, has generally fallen.
“And if the price of fuel goes up by 5%? We’ll take care of that. If you buy a ticket to Rome for the next two months and in the meantime the price of fuel goes up by 10%, we won’t come to you and ask for another 10% of the ticket value. Things like that happen – sometimes to our advantage, sometimes to the advantage of the buyer.
“And why are people stuck abroad? Because the foreign companies are gone. This underlines how important it is to support Israeli companies. As soon as a rocket hits, everyone runs home and we stay here and do the work.”
Where is the solidarity? The public has the impression that the airlines have become greedy.
“And should we lose money? There have been times when we have made losses too. So if it is possible to make some money – and in aviation, 2% profit is a lot – then that’s the thing. During the pandemic, when nobody was flying, I paid my employees wages while the government did not provide any financial support. So there should be fairness.”
Didn’t the government help during the pandemic?
“It lent me money and I had to pay it back.”
So is war the time to earn a lot?
“You’re not making a big profit and what you’re making doesn’t even cover the losses from October when nobody was flying. Airlines don’t make millions in relation to their turnover.”
How do you set flight prices?
“It depends on demand. It’s usually computer-based, like booking a hotel. For example, you offer a flight to Rome for $250, sell 100 seats, and when there are 70 seats left, you lower the price. Or vice versa: If we sell well and there are only 70 seats left, the price goes up.”
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Waiting passengers at Ben Gurion Airport
(Photo: AFP)
They also hold the concession and management rights for the port of Eilat, which has been closed since the beginning of the war.
“There is no activity there at all and that is a very big problem.”
Perhaps the Hezbollah threat to Haifa will divert cargo ships south to Ashdod, and it is possible that the port of Eilat will also become active if some of the cargo is transferred there. After all, a ship from Europe can reach Eilat safely via the Mediterranean.
“A ship from Europe unloads its cargo in Eilat? And then we have to transport the goods with 100 trucks, which is very expensive because there is no train to the north? I can’t imagine that, but the general director of the port knows more about it than I do.”
160 dock workers are threatened with dismissal because there is no work and they see no other solution.
“Perhaps unpaid leave is a solution.”
You have had the concession to operate and manage the port for eight years, and nothing has happened since the Houthis threatened. Do you regret the deal?
“I don’t regret anything at all. At some point this crisis will end.”
They also own hotels, including the Orchid, Herbert Samuel and Setai chains. This sector is also suffering greatly at the moment.
“Foreign tourism is almost zero and domestic tourism does not cover the costs because even if there is tourism, it is usually only on weekends. So the price we are paying is high and has been for a long time. But I think we are seeing the end and after the big upsurge in reactions from Iran and Hezbollah, calm will reign.”
“Being a businessman while waging war is no fun. There’s a Chinese proverb I learned in Hong Kong: ‘One man’s misfortune is another man’s fortune.’ Sometimes you find yourself on the other side of the equation.”
Speaking of the other side of the equation, you have filed a lawsuit on behalf of the group companies against Avi Hormaro, who has been the chairman and CEO of the companies you run in Israel for decades. You claim that he took advantage of the trust placed in him to illegally transfer shares and rights in his name. On the other hand, he claims that your accusations are baseless, that everything was done legally and that there is no reason to take action against him. Moreover, he claims that everything was done with the consent of your brothers, who are shareholders but are not part of the lawsuit against him.
“He was also chairman of the board, he made a decision and signed it. In a matter like this (share transfer), you can’t make a decision yourself and then sign and confirm it yourself. That’s not how it works. He says Joe and Rafi agreed verbally, but you have to see how many written confirmations support that.”
“My brothers and I have the same connection to the companies, and as far as I know, none of us is allowed to give such authorization. We asked a lawyer who acts as an expert witness for an opinion, and the summary says that Hormaro took shares and money for himself without authorization. So they say, ‘This one agreed, that one agreed.’ In short, I do not think a judge will dismiss a lawsuit worth several million shekels for shares worth several hundred million that were transferred without authorization.”
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The Nakash Brothers
(Photo: Tal Shahar)
Some say the lawsuit reveals a problem between you and your brothers Rafi and Joe. Are you still on good terms?
“There is a difference of opinion between us, but we still communicate with each other. We have been in a business partnership for 50 years. We all agree that Hormaro has appropriated shares and property without permission. What we do not agree on is the solution, what to do about it.”
If he had behaved inappropriately, wouldn’t he no longer be with the company by now?
“He is still in the company because the agreement requires him to return shares worth NIS 100 million. Some people – no matter who – think that the solution is to accept the matter now, without going to court. But I say, ‘OK, but he has to go.’ So there are differences of opinion between the brothers about whether and when he should go, but there are no differences of opinion about what he did.”
If you have reached an agreement, why file a lawsuit?
“It is claimed that more should be repaid. The agreement they made with him is NIS 100 million, although I was not in favor of it.”
Joe said the CEO did a good job. He seems to be on Hormaro’s side, not yours.
“We were very successful in Israel, mainly thanks to Joe’s and my ideas. Yes, Hormaro did a good job, but he also took shares and property without permission. That’s called corporate robbery.”
You have been living in Israel for 25 years. Given the situation, are you considering joining your brothers in the US and leaving the Middle East?
“I live here, I have a 25-year-old and a 6-year-old child, and I don’t even think about leaving. I came here to live, this is my life. It’s not something I do reluctantly. For me, this is the best place in the world to live. What makes life fulfilling is not the size of the car or the house or how much it costs, but the opportunity to go out, drink coffee and meet people who are your people. That’s what Israel is all about. Someone once told me, ‘I want my children to sing the classic Israeli folk songs too.’ That’s not going to happen if you raise children in the United States.”
Are you afraid of a missile attack?
“No. I live in the Orchid Hotel in Tel Aviv, which we own, and the drone that hit Shalom Aleichem Street in the city flew past my house, which is next to the American consulate. It was a bang that shook the building. But maybe Haniyeh’s assassination is a deliberate provocation, a trigger for something bigger – after they bomb, we bomb them, and maybe we can end the story of Iranian nuclear weapons.”
