Etihad secures 4% stake in Virgin Australia; Eyes further expansion

0
1110
Spread the love
etihad virgin australia
Etihad's James Hogan (left) and Virgin Australia's John Borghetti. Photo - Alan Pryke via Herald Sun

Abu Dhabi’s flagship carrier announced on Tuesday it has acquired a 4% stake in Virgin Australia Holdings in a stock market transaction, strengthening its stake in the Australian airline.

Etihad said in a statement the stake was bought through market purchases in recent weeks without giving any details about the money involved and whether it has plans to expand its stake.

“Etihad Airways believes that this equity investment in Virgin Australia’s domestic operations significantly strengthens the 10-year strategic partnership forged by the two carriers in August 2010,” the statement said.

The UAE flag carrier is focusing its attention on scaling its operations around the globe – particularly in Europe – as it faces a fierce competition from rivals such as Dubai government-owned Emirates and Qatar Airways.

The Abu Dhabi-based airline raised its stake in Air Berlin to nearly 30% from just under 3% in December last year, paying approximately $90.3 million and lending another $255 million to the German carrier.

It also bought a 3% stake in Irish airline Aer Lingus last month as part of its bid to get hold of more European routes.

Virgin Australia’s foreign equity ownership is currently sitting at 46%, with Sir Richard Branson enjoying a 26% share while Air New Zealand holding around 20%.

Virgin saw its shares rise 1.2% on the Australian bourse on Tuesday following news that rival Qantas is likely to suffer its first annual net loss since its privatisation in 1995.

Etihad started its flights to Australia in 2007 and the two carriers together operate 24 flights a week between Abu Dhabi and Australia.

The airline’s first-quarter revenues rose 28% on the back of increased passenger numbers and the expansion of its global network.

Further Stake

The Australian daily newspaper reported Abu Dhabi-based carrier Etihad is seeking to boost its shareholding in Virgin Australia to 10% after paying $36.5 million for a 3.96% stake in the local airline.

The Sydney-based newspaper claimed Etihad chief executive James Hogan desired further investment in Virgin and confirmed Monday night that the airline was in talks with the Foreign Investment Review Board about increasing its stake.

Facebook Comments