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Etihad set to double its stake in Virgin Australia

Etihad Airways allowed to take its equity stake to a maximum of 10%

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Gulf News

Dubai: Etihad Airways said on Thursday it has got a go-ahead from the Australian Government to almost double its stake in Virgin Australia.

The Abu Dhabi-based carrier earlier this year acquired a 4.99 per cent in Virgin Australia, and has now been allowed to take its equity stake to a maximum of 10 per cent.

“Etihad Airways has welcomed the decision by the Australian Government to allow the airline to increase its equity stake in Virgin Australia Holdings to a maximum of 10 per cent,” Etihad Airways said in a statement, adding that the move is expected to lead to further revenue generating opportunities for Etihad.

“The strategic partnership has already delivered significant revenues to each airline. It is expected that the equity stake in Virgin Australia will lead to further revenue generating opportunities,” the carrier said in the statement.

Etihad has been pushing for the increase in its stake in Virgin Australia, and, said, it had applied to Australia’s Foreign Investment Review Board (FIRB) to raise the level of its investment.

Together, Etihad Airways and Virgin Australia currently operate 24 flights per week between Australia and Abu Dhabi, offering Australian travellers access to a combined network of more than 285 global destinations, Etihad stated.

“Etihad’s strategy of buying up stakes in partners is yielding it both commercial and revenue success,” analyst Saj Ahmad of StrategicAero Research, told Gulf News. “The initial stake in Virgin Australia was always going to increase given the depth of their partnership and it’s possible that Etihad would like to lift this beyond the 10 per cent.”

He added that this move by Etihad will raise eyebrows at “an ailing Qantas” — Australia’s national carrier, which is “already failing in its attempts to compete with other Gulf carriers such as Emirates and Qatar Airways”.

“And with Etihad upping the ante right on Qantas’ turf and looking to poach customers from its lucrative domestic market, Etihad has carved another masterstroke of putting its rivals on alert with no clear direction for them to respond in kind,” Ahmad pointed out.

The multi-tiered partnership between the two airlines includes code-sharing on flights, joint marketing initiatives and reciprocal earn-and-burn on their respective frequent flier programmes.

Etihad Airways has been aggressively pursuing its growth strategy by acquiring equity stakes in some airlines and striking alliances with others. The carrier, which codeshares with 35 airlines, has been on a buying spree and today holds equity investments in four global airlines including airberlin, Air Seychelles, Aer Lingus and Virgin Australia.