Dubai: Israel’s third-largest airline Israir would be valued at around $70 million, according to UAE-based NY Koen Group, which on Wednesday confirmed it will be one of the bidders for it.
Through the acquisition, NY Koen plans to enter the market for short-haul low-cost carriers, which is set to recover faster than the rest of the airlines industry. The company, which owns Aero Private Jet, is still waiting for “all the information” on Israir’s “plans” to figure out a bid amount. If the acquisition happens, Israir will continue to operate as an independent entity within NY Koen’s portfolio, said Naum Koen, CEO.
“It will be a separate company because we are speaking about low-cost – it will give big benefits to the company,” said Koen, on being asked whether he would consider combining it with Aero Private Jet. “A lot of Israeli companies are approaching us to partner on the deal.”
A buyout will allow NY Koen to tap a potentially lucrative market between UAE and Israel. Israir has already begun making preparations to fly to Dubai and Abu Dhabi.
Earlier, Khalaf Al Habtoor, Chairman of Al Habtoor Group, confirmed talks with Israir to open direct commercial flights, “and we are preparing to reveal a few collaborations in the coming days,” he said in a statement.
Shift focus from Europe
Israir, which has a fleet of seven aircraft, operates scheduled and chartered flights to various destinations in Europe, which is extremely popular with travellers from Israel and the UAE.
Analysts in the past have questioned the rationale behind airline acquisitions during the current crisis. However, one can’t completely rule out long-term gains from doing so.
Grit out the tough phase
“Everyone knows it will take a few years for the market to recover - which does factor into the value of any airline,” said Brendan Sobie, aviation analyst. “But it does not totally turn off potential long-term investors.”
According to Boeing’s latest forecasts, passenger traffic growth will increase by an average of 4 per cent per year over the next 20 years. In the meantime, the global commercial fleet is expected to reach 48,400 by 2039, up from 25,900 aircraft today.
The UAE-Israel flights routes that companies like NY Koen are counting on may not start until early 2021 as COVID-19 weighs on travel demand.
This has not stopped airlines and hospitality groups from making early moves. Etihad began selling tickets to Israeli travellers through Tel Aviv-based TAL Aviation Group in September.
Emirates Flight Catering, which serves more than 100 airlines, plans to set up a dedicated production facility for kosher food in the UAE. Habtoor Hospitality became the first hotel group to introduce kosher-certified meals, when it partnered with Ellis Kosher Kitchen.