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.
Air NZ says it funded the purchase 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 investment in Virgin Blue is part of Air New Zealand’s strategy to develop scale and reach in this region,” Fyfe says. “This investment cements the emerging relationship between our two airlines and demonstrates the confidence we have in Virgin Blue both as an entity and as a partner for Air New Zealand.”
Air NZ 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 with Virgin Blue frequently include an equity aspect, but the proposed alliance does not do so.”