Abu Dhabi's flag carrier Etihad Airways has acquired a 3.96 per cent stake in Virgin Australia, part of Richard Branson's Virgin Group, strengthening the 10-year strategic alliance forged by the two carriers last year.
Etihad said it had recently purchased the stake in the market, but did not say how much it paid for the stake.
Several media reports suggested that Etihad spent $35.6 million on an average for the 3.96 per cent stake, and has plans in the future to raise it by as much as 10 per cent.
"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," Etihad said in a statement.
Etihad has recently been buying small stakes in other airlines, much of it eye-catching.
In December 2011, it acquired nearly 30 per cent in Germany's troubled second-largest airline Air Berlin and weeks later, acquired 40 per cent in Air Seychelles. It has also amassed a nearly 3 per cent stake in Irish carrier Aer Lingus.
Sir Richard Branson's Virgin Group is the largest shareholder in Virgin Australia with a 25 per cent stake, while Air New Zealand has a 19.9 per cent stake.
Etihad, fully owned by the oil-rich government of Abu Dhabi, began flying to Australia in 2007 and the two carriers together operate 24 flights a week between Abu Dhabi and Australia.