Israir (6H, Tel Aviv Ben Gurion) has advised the Tel Aviv Stock Exchange (TASE) of preliminary merger talks with Arkia Israeli Airlines (IZ, Tel Aviv Ben Gurion). Rami Levy, the controlling owner of Israir, is also reportedly in early discussions with Israel's Competition Authority in a bid to defuse any antitrust concerns a merger may present.

Ongoing geopolitical events in Israel have dampened demand for air travel there, but Hebrew-language outlets report that both airlines believe this presents as an opportune time to merge. However, possible competitive issues that may scuttle any deal include Israir and Arkia being the only operators on the Tel Aviv - Eilat route.

Along with El Al Israel Airlines, Israir and Arkia are the only scheduled passenger carriers based in Israel, with Israir and Arkia competing in the budget market segment. According to ch-aviation PRO airlines data, Israir's six A320-200s fly to 38 destinations in 25 countries, while Arkia's two A321-200NX and three E195s fly to 16 airports in 14 countries. The two airlines compete on several routes, including Tel Aviv - Athens, Tel Aviv - Chisinau International, Tel Aviv - Batumi, Tel Aviv - Tbilisi, and the local Tel Aviv - Eilat route.

The current talks are not Arkia's first merger foray. In 2022, discussions took place with El Al about a potential merger and turning Arkia into El Al's LCC arm. However, the proposal failed to secure approval from the Israel Competition Authority. Arkia is 70% owned by the Nakash brothers.

Israir is a subsidiary of Israir Group. That entity is 36.7% owned by a holding company called Shai Odem, which, in turn, is controlled by the Israeli businessmen Rami Levy and Shalom Haim. Levy owns another 20.8% of the carrier and maintains control over it. Like Arkia Israeli Airlines, this is not Israir's first merger rodeo. Merger talks with Smartwings (Czechia) (QS, Prague Václav Havel) now date back over a year. If that merger bid succeeds, Israir will gain control over the Czech carrier's 34 aircraft, turning it into Israel's biggest commercial aviation operator.

The TASE filing notes Arkia initiated the current merger discussions. Israir says it receives "various business opportunities from time to time, as these progress into advanced negotiations, which require an update, the company will update according to legal requirements."