Qatar Airways to buy 25 per cent of Virgin Australia
Written by admin on October 1, 2024
Virgin Australia could soon be part-owned by Qatar Airways, adding a major Australia-to-the-Middle East route to the roster by mid-2025.
Qatar Airways intends to take a 25 per cent stake in Virgin Australia, which will be subject to approval from the Foreign Investment Review Board.
The deal would allow flights from Australia’s four largest cities to Doha, under a plane and crew lease agreement.
In a statement, Virgin says the proposed minority ownership stake would create “more choice and better value for Australians”.
“Domestic competition in Australia is dependent on Virgin Australia thriving through the inevitable ups and downs of aviation,” the parties involved say.
The deal would be done by way of the Gulf airline acquiring 25 per cent of the stake of Virgin owner, Bain Capital.
“This partnership brings the missing piece to Virgin Australia’s longer-term strategy and is a huge vote of confidence in Australian aviation,” Virgin Australia chief executive Jayne Hrdlicka said.
The two airlines have “codeshared” flights since 2022.
The proposed deal would allow Virgin to resume eight-hour-plus flights again, and has positive implications for the development sustainable aviation fuel, given Virgin Australia’s commitment to Australian jet fuel decarbonisation efforts, the statement reads.
“We believe competition in aviation is a good thing and it helps raise the bar, ultimately benefiting customers,” Qatar Airways chief executive Badr Mohammed Al-Meer said.
“This agreement will also help support Australian jobs, businesses and the wider economy.”
The Virgin Australia boss says government Foreign Investment Review Board approval was not being taken for granted, but the deal-makers had filed submissions outlining the benefits for Australian aviation, Australian travellers and the economy.
The parties involved claim the deal would add $3bn to the Australian economy through incremental visitor flows during the next five years.
Virgin Group and the Queensland Investment Corporation will retain shareholdings in Virgin Australia.
“Importantly, it will further strengthen Virgin Australia’s ability to compete over the long term, which will inevitably translate into more choice and even better value airfares for consumers as well as additional Australian aviation jobs,” Ms Hrdlicka said.
Virgin Australia went into voluntary administration in April 2020, almost immediately once the Covid-19 pandemic took hold.
The airline was saved by US-based Bain Capital, the private investment firm started by Mitt Romney.
When it went bust, Singapore Airlines and Etihad had stakes in Virgin Australia.
Speaking on Channel 9’s Today on Monday morning, Ms Hrdlicka said this Qatar deal was different because it would be one large, strategic cornerstone stake.
“We had four investors who were all competitors and it didn’t play out that well because we didn’t have one party who was really deeply connected to helping us be successful in our Australian market,” the chief executive said.
When administrators were called in the company stopped trading on the ASX. A long-delayed return to the local bourse has been touted for years.
Ms Hrdlicka said the Qatar Airways ownership would set them on a path to relisting.
“And it’s the first step in a migration that will ultimately see Virgin Australia back in the public markets, held, we assume, largely by Australian institutions and retail investors.”
