Knafaim in the First Quarter: Global Got Capital, QAS Is Again Tied to Ben Gurion
The Shlomo transaction at Global closed and injected capital into the leasing platform, but the quarter also showed how dependent QAS remains on the return of foreign airlines to Ben Gurion. Knafey Tzuka provides the clearer cash layer and the parent remains debt-free, but the larger value still has to become cash that can move upstairs.
Knafaim came out of the first quarter of 2026 with a better asset structure, but also with a reminder that in an aviation holding company value is not enough until it reaches the parent. The Shlomo transaction at Global Knafaim closed after the balance-sheet date and injected about $40.4 million into Global, making the leasing platform better funded. Knafey Tzuka continued to show profit and dividends moving upstairs, and won a new Ministry of Defense tender. In contrast, QAS began the year with a recovery in January and February, but the Iran campaign brought the Ben Gurion constraint back and turned a revenue-growth quarter into a gross-loss quarter. The quarter is therefore not as weak as the attributable loss suggests, but it also did not solve the practical question: how much of NAV, leasing value, and operating activity will become recurring cash accessible to shareholders. Over the next 2-4 quarters the read will change if Global deploys the new capital into good deals, QAS returns to traffic volumes that cover its costs, and Knafey Tzuka turns the tender win and the Albatross expansion into recurring profit.
What Knafaim Is Really Measuring Now
Knafaim is an aviation holding company, not a single operating company. It holds aircraft leasing through Global Knafaim, maintenance and defense-industry activity through Knafey Tzuka and Albatross, ground handling through QAS, a line-maintenance venture with Nayak, and a small remaining holding in El Al. Consolidated profit is therefore less important than the move between three layers: value created in subsidiaries, cash that moves upstairs, and cash flexibility at the parent.
The previous annual analysis focused on the gap between value and cash accessibility. The current quarter did not close that gap, but it changed the map: Global received capital and a partner, Knafey Tzuka strengthened as a cash layer, and QAS again showed that its activity depends on the return of foreign airlines to Israel.
| Economic layer | What happened in the first quarter | Investor relevance |
|---|---|---|
| Aircraft leasing | Revenue fell 15%, but net profit rose to $958 thousand | Improvement relied mainly on lower finance expenses, not a higher revenue run rate |
| Maintenance and industry | Revenue rose to $9.6 million and net profit to $1.8 million | This is the layer that continues to generate dividends to the parent, although the comparison includes Albatross and one-off revenue |
| Ground handling | Revenue rose 23%, but gross loss was $120 thousand | Summer preparation met weaker flight traffic, so cost came before revenue |
| Parent company | No financial debt, and after the April dividend about $26 million of cash and short-term investments remained | Flexibility exists, but it will need recurring support from subsidiaries, not only cash on hand |
Global Got Capital, but Value Still Has to Move Upstairs
On May 18, 2026, the transaction bringing Shlomo into Global Knafaim was completed. Global received about $40.37 million, and after the issuance Knafaim and Shlomo each hold 40.11% of the capital and voting rights. The presentation frames the transaction at a pre-money value of about $60.3 million and a company value of more than $100 million after the investment, with about $79 million of cash at Global after completion.
That improves Global’s growth potential, but it also changes the accessibility layer for Knafaim shareholders. The direct ownership stake declined, control became joint, and the dividend policy presented at Global refers to distribution of up to 30% of annual net profit starting in 2027 for 2026 earnings. The new capital can create value if invested in aircraft at attractive returns, but it is still not cash at the parent.
Global’s own quarter is also less clean than its bottom line. Revenue fell to $2.1 million because an A220 sold in 2025 no longer contributed, while an A320 acquired in 2025 and a B737 acquired in February 2026 contributed only for their respective holding periods. Net profit rose to $958 thousand mainly because finance expenses declined and deposit interest income increased. That proves the funding structure improved, not that the revenue run rate has already risen.
The notes sharpen the cost of growth. In February, Global acquired a B737-800 leased to Eastar Jet until the fourth quarter of 2029. Gross cost, including transaction costs, was about $25 million, but net payment at closing was about $15.2 million because the company also assumed lessee deposits and maintenance reserves of about $8.4 million. Global working capital fell from $21.1 million at the end of 2025 to $11.4 million at the end of March 2026, partly because of the aircraft payment and the classification of about $4.5 million as a current liability expected to be returned to the lessee after an engine overhaul within one year.
There is no covenant-stress signal here. Global’s equity-to-assets ratio was 47.9% versus a 15% requirement, equity was $62 million versus a $48 million requirement, and liquid balances were $38.3 million versus a $10 million requirement. The point that will decide Global is therefore not compliance with debt terms, but the quality of deployment of the new capital.
QAS Weakened Just as Maintenance Strengthened
QAS is the constraint that returned to the quarter. Its revenue rose to $9.3 million from $7.6 million in the comparable quarter, mainly because activity was stronger in January and February. Still, it moved to a $120 thousand gross loss. The company prepared staffing and inputs for the summer 2026 season, and then the Iran campaign caused a full closure of Israeli airspace, a gradual and limited return of flights, and another delay in the return of some foreign airlines.
The filing says Ben Gurion returned to regular activity on April 9, 2026 after the ceasefire, but activity volumes remain limited. Many foreign airlines, mainly from the United States and parts of Europe, have not yet returned to full activity, and some plan to return later in 2026 or only in 2027. QAS expects summer 2026 activity volumes to be significantly lower than the estimates that existed before the Iran campaign. State compensation for Iron Swords war damages, about $1.2 million in the quarter, softened the damage but does not replace recurring civilian activity.
The Nayak venture, intended to establish line-maintenance activity at Ben Gurion, remains dependent on the same foreign-airline return. At the beginning of 2026 the parties increased preparations, with an ambition to start in the second half of the year, but the filing says it is difficult to estimate the timing and scope. Without stable airline customers at the airport, the new platform remains more of an option than an earnings engine.
On the other side, Knafey Tzuka is the steadier part of the group. Revenue was $9.6 million and net profit was $1.8 million. Part of the jump comes from consolidating Albatross, one-off revenue in one project, and dollar weakness against the shekel affecting the dollar presentation of shekel activity, so the growth rate should not be annualized. But there is one thing QAS and Global did not provide in the quarter: a dividend to the parent.
The parent received $821 thousand from Knafey Tzuka during the quarter, and after the balance-sheet date another $1.56 million dividend was distributed from it. In April 2026 Knafey Tzuka was also notified that it won a Ministry of Defense tender to continue an avionics installation and upgrade project for fighter aircraft, for an initial 36-month period with a 24-month option, with expected revenue of about NIS 28 million in the initial period. After the period, Albatross leased space in southern Israel for an additional wiring-harness factory. These items do not guarantee an immediate jump, but they strengthen the operating layer that already knows how to send cash upstairs.
Liquidity Is Strong, but the Conclusion Depends on Cash Conversion
At Knafaim, cash flow has to be tested on two levels. All-in cash flexibility remains high: at the end of March 2026, parent liquid means exceeded financial liabilities by $27.6 million, excluding the value of El Al shares, and according to the presentation, after the April dividend payment of about $5.5 million, cash, deposits, and short-term investments were about $26 million at the end of May, with no financial debt. Recurring upstream cash to the parent is narrower: during the quarter dividends came from Knafey Tzuka and El Al, and about $1.3 million came from selling part of the El Al shares, but there were no dividends from Global or QAS.
The April dividend, about NIS 16.3 million, does not look unusual relative to cash and debt. It does sharpen the need for recurring cash: distributions funded mainly by existing cash and El Al disposals are different from distributions supported over time by dividends from Knafey Tzuka, and later from Global or QAS.
The presentation shows an indicative NAV of $131.5 million, including $37.9 million for Global, $27.2 million for Knafey Tzuka, $21.7 million for QAS, $18.6 million for El Al, and another $26.1 million of cash and short-term investments with no financial debt. That is a useful value screen, but the two unlisted holdings were estimated by the company at 7x average pre-tax profit over four years and without an external valuation. NAV is a starting point, not proof that value is accessible.
The first quarter improved the picture versus the end of 2025 because the Global transaction closed and Knafey Tzuka added an anchor. Still, the holding quality of Knafaim will be measured by the move from paper value to parent cash. Global needs to use the new capital in good deals, QAS needs to return to profitability with civilian flight volumes, and Knafey Tzuka needs to show that the tender win and Albatross increase recurring profit. Without all three moving together, the gap between NAV and accessible cash remains the central constraint.
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