January 2011
New Zealand
- Air New Zealand buys stake in Virgin Blue
- 12 January 2011
- By Various
- Air New Zealand has bought a 14.9% shareholding in Australia’s Virgin Blue worth A$145 million ($143.2 million), but the New Zealand carrier stresses it will not increase its stake further.
According to an Air NZ statement, the purchase was funded from available cash. The airline obtained the necessary approval from the Australian Foreign Investment Review Board for a share of up to 14.99%. The total foreign shareholding in Virgin Blue cannot be more than 49%, and UK-based Virgin Group already holds 26%.
Virgin Blue and Air NZ have recently won approval for a trans-Tasman joint venture, but Air NZ CEO Rob Fyfe says the carrier has “no intention to make a takeover bid for Virgin Blue.” He further stresses that Air NZ will not be seeking representation on the Virgin Blue Board for at least six months, and that “any representation would be a decision for the Virgin Blue Board and shareholders.”
The airline first announced it was applying to form a joint venture with Virgin Blue in May 2010. In July, it issued a statement rejecting media speculation that it was purchasing shares in the Australian carrier. At that time, Air NZ said it was “conscious that airline alliances such as the one planned.
The move is unlikely to be popular with Australian national carrier, Qantas, as it allows Air NZ access to the Australian domestic market without the cost of doing the actual flying. This will present Qantas with added competition in this market and will bring Virgin Blue's range of flights closer to that of Qantas for international travel.
