Much speculation is swirling over which airlines are likely to buy into Virgin Australia once Air New Zealand sells its 25.9% shareholding in the Australian carrier.
The last two weeks have proved tumultuous for Virgin Australia, with Air NZ (Virgin Australia’s largest shareholder) flagging plans to sell its stake (see: Air NZ confirms it may sell out of Virgin Australia) and the world’s largest ratings agency, Standard & Poor’s cutting outlook for Virgin Australia from stable to negative.
Virgin Australia’s other major shareholders are Etihad (which owns 25.1%) and Singapore Airlines (which owns 23.11%). The Sydney Morning Herald has noted that Singapore Airlines has the financial muscle to bid for the rest of Virgin Australia, but is unlikely to do so unless a Chinese rival, say China Southern or China Eastern, makes an offer.
The paper quoted aviation experts saying the remainder of Virgin would cost about AUD 1.5 billion, “including an expected recapitalisation of the carrier”.
Speculation on possible buyers for the Air NZ stake has mentioned Singapore Airlines, Delta Air Lines, Chinese carriers and possibly United Airlines. Etihad has hinted it is unlikely to be interested.
Delta Air Lines, Virgin Australia’s trans-Pacific alliance partner, says it is not currently considering buying into the Australian carrier – but has not ruled it out, according to the Sydney Morning Herald. Delta could buy up to 19.9%, under the rules.
Virgin’s domestic arm can be wholly foreign owned but the international side must remain majority Australian-owned to retain the carrier’s international traffic rights. No fewer than 51% of shares must stay in Aussie hands.
Written by Peter Needham