Virgin Australia yesterday said Singapore Airlines had agreed to buy a further 9.9 percent stake in the company for A$122.4 million (US$125.6 million) as the Qantas rivals step up their game.
The Singapore flag carrier will purchase 255.5 million shares held by the Virgin Group at A$0.48 each, taking its total holding in the Australian domestic airline to 19.9 percent, Virgin said in a filing to the National Stock Exchange of Australia.
The purchase, which follows Singapore Airlines’ purchase of a 10 percent stake last year, still needs the approval of Australia’s Foreign Investment Review Board even though it remains below the threshold of 20 percent at which a full takeover bid must be launched.
If it goes ahead, Singapore will become one of the top three shareholders along with Richard Branson’s Virgin Group and Air New Zealand.
Abu Dhabi-based airline Etihad also holds a significant share, giving Virgin Australia hefty financial clout to contend domestically with Qantas.
“Our partnership with Virgin Australia has been going from strength to strength, offering a wide range of consumer benefits,” Singapore Airlines chief executive Goh Choon Phong said.
“Increasing our stake in Virgin Australia is another example of Singapore Airlines’ deep commitment to the important Australian market,” Goh said. “It also demonstrates our support for the ongoing transformation of Virgin Australia, which has created a more competitive aviation market in Australia.”
The two carriers entered into a long-term partnership in 2011 covering code-sharing, reciprocal frequent-flyer program benefits and coordinated schedules.
Australia has a lucrative domestic market and global airlines have been deepening ties with local carriers to access it.
Last year, Qantas and Emirates announced a major global alliance that opens up the Australian firm’s domestic network of more than 50 destinations and nearly 5,000 flights per week to the Dubai-based airline.
Singapore Airlines is a key international competitor to Qantas.
The announcement comes a day after Australia’s competition regulator approved Virgin Australia’s purchase of a 60 percent stake in low-cost rival Tiger Airways Australia, despite concerns about the market becoming a duopoly.
Tiger Airways Australia is the loss-making local subsidiary of Singapore’s Tiger Airways.