Big Chinese companies, or airlines like China Eastern Airlines and China Southern Airlines, may look to buy into Qantas now that Chinese conglomerates have bought stakes in Virgin Australia, according to senior analysts.
China’s Nanshan Group will buy about 20% of Virgin Australia from Air New Zealand, the NZ flag carrier said on Friday. The deal is worth about AUD 260 million.
HNA Group, the largest private airline operator in China and owner of Hainan Airlines, plans to buy 13% of Virgin Australia and to raise the holding eventually to 20%. Virgin Australia plans to begin daily services between “a major Australian gateway airport” and both Beijing and Hong Kong from 1 June 2017, the flights to be operated with A330-200 aircraft configured with 275 seats.
According to Credit Suisse analysts cited by Bloomberg and quoted in Melbourne’s Age newspaper, the acquisitions could prompt a top-tier Chinese airline to pursue a stake in Qantas. The paper said Credit Suisse had noted that at least 5% of Qantas is available for an overseas investor without breaching the 49% foreign ownership cap set by Australian law.
China Eastern Airlines and China Southern Airlines are potentially the most likely suitors, apparently, and the share price is seen to be right.
Written by Peter Needham