Etihad acquires 3.96 % stake in Virgin Australia

Etihad, the UAE flag carrier, has confirmed acquiring 3.96 per cent stake in Virgin Australia, a statement said. The airline has been quietly buying shares on the open market for some time. “The stake has been built over recent weeks, through purchases on the open market,” the airline said in an e-mailed statement. “Etihad Airways believes that this equity investment in Virgin Australia’s domestic operations significantly strengthens the 10-year strategic partnership forged by the two carriers in August 2010 and will enrich the commercial benefits which the alliance already provides for both airlines as well as increasing the benefits to Australian consumers and visitors to Australia.” This is the fourth major acquisition announced by the Abu-Dhabi-based airline in six months, following its acquisition of a 30 per cent stake in AirBerlin in December 2011, followed by a 40 per cent stake in Air Seychelles announced in February and a 3 per cent stake in Aer Lingus announced more recently. Etihad did not say whether it intended to increase its stake further. Virgin Australia recently completed a restructure that helped it get around Australian foreign ownership laws that limited offshore investment in the company to 49 per cent. Formerly known as Virgin Blue, the airline was launched in 2000. Richard Branson's Virgin Group owns 26 per cent of Virgin Australia, and Air New Zealand, which also has an alliance with the airline. The move appears to be part of a wider Etihad effort to seek stakes in overseas carriers to gain a possible edge over its regional and international rivals. It did not disclose how much it paid for the shares. Etihad chief executive James Hogan earlier told Gulf News, that acquisition would be part his airline’s growth strategy. “We will continue to pursue growth opportunities, including acquisition that suits our strategy,” he said. The eight and a half-year-old airline, which is growing fast organically, has also taken the acquisition route as part of its growth strategy to reach out to more destinations and passengers worldwide. Etihad Airways, launched by Abu Dhabi Government, has become profitable last year – for the first time. This will also help Etihad to increase passenger traffic to Abu Dhabi city where the government is constructing the Midfield Terminal Complex (MTC) – a Dh11 billion project that is part of a Dh25 billion redevelopment and expansion of Abu Dhabi International Airport. “Together, Etihad Airwaysand Virgin Australia operate 24 flights a week between Abu Dhabi and Australia and passengers have access to a combined network of more than 150 destinations,” the airline said. Last month Etihad Airways leased a Virgin Australia Boeing 777-300ER for use on its route between Abu Dhabi and Kuala Lumpur. Etihad Airways began flying to Australia in March, 2007 when it launched services to Sydney. Melbourne and Brisbane were quickly added. Nearly 2.2 million passengers have been carried between Abu Dhabi and these three cities in the last five years. Etihad Airways has strategic codeshare partnerships with 35 airlines around the world.