Doha: Virgin Australia returning to profitability will be the priority for Air New Zealand chief executive Christopher Luxon when he joins the board next month, he told Gulf News in an interview.

Virgin Australia declared an A$83.7 million (Dh286.9 million) loss for the six months leading to December 31, 2013. It last declared a profit in the 2011/2012 financial year. Australia’s financial year runs from July 1 to June 30.

Air New Zealand holds a 24.5 per cent stake in Virgin Australia. Luxon will be joined by James Hogan, Etihad Airways’ President and chief executive and a yet-to-be announced representative from Singapore Airlines. Etihad has a 21.2 per cent stake and Singapore Airlines has 22.2 per cent.

“[Virgin Australia have] gone through a fantastic period. They’ve been incredibly well led by John Borghetti [Virgin Australia CEO] and his team and John’s done an absolutely outstanding job making sure there is a real choice and a real competition existing in [the Australian] market place,” Luxon said.

Luxon spoke to Gulf News on the sidelines of the International Air Transport Association (IATA) annual meeting held in Qatar this past week.

“Now is the time to convert it and make sure that [Virgin Australia] gets to profitability and that’s really what frankly what all the shareholders, and all the airline shareholders, are all very united around,” he said.

Capacity war

Virgin Australia has been in a domestic battle with rival airline Qantas that has seen both carriers flood the market with capacity. However, the two recently signalled that the capacity war is over.

Along with its equity stake, Air New Zealand has a five year revenue sharing joint venture with Virgin Australia on Trans-Tasman routes (services between Australia and New Zealand).

“It’s really important because there are 1 million Australians going to New Zealand every year and there are 1.2 million Kiwis going to Australia every year,” Luxon said.

Air Zealand is now looking to tie up with Singapore Airlines that will give it access to 58 destinations in South East Asia, Europe and India. Luxon said the partnership has been approved by the competition commission in Singapore and is now awaiting approval from the New Zealand Ministry of Transport.

Luxon is hopeful the approval will come “within the next couple of months” and that the partnership will be flying in December.

There has been speculation that Air New Zealand and Singapore Airlines are looking to muscle Etihad out of Virgin Australia. Luxon, however, dismissed these claims as “rubbish”.

“We have a very positive relationship at a CEO to CEO level,” Luxon said of the four airlines including Etihad.

Goal

He added that, “The reality is we are all very united in ensuring Virgin actual gets profitable … its very clear we’re going on that as directors making sure Virgin can win in Australia.”

Etihad has an agreement with Air New Zealand that it will not fly into the country, instead codesharing to New Zealand destinations from Australia.

Asked whether he had any concerns of Etihad changing its mind, Luxon said the relationship between the two airlines is “very strong” but also said “that it’s ultimately their decision.”

All three airlines have “creep provisions” approved by the Australian Foreign Investment Review Board (FIRB) to lift their stakes in Virgin Australia. Etihad and Singapore Airlines can both increase their stakes to 22.9 per cent while Air New Zealand can increase theirs to 25.9 per cent.

Luxon said Air New Zealand is “comfortable” with its current stake.