Virgin Australia sells 10 per cent stake to Singapore Airlines
30 Oct 2012
Virgin Australia today sold 10 per cent of its business to Singapore Airlines even as it agreed to take a 60-per cent stake in Tiger Airways Australia in an escalation of its battle with Qantas.
In a series of announcements, Australia's second-biggest airline after Qantas also said it was making a A$98.7 million ($101.9 million) takeover offer for Perth-based Australian regional carrier Skywest.
Virgin agreed on a payment of A$35 million (US$36 million) for its holding in Tiger, the loss-making subsidiary of Singapore's Tiger Airways, while Singapore Airlines bought its stake in Virgin for A$105 million.
According Macquarie analysts, the transactions overall represented a monumental shift for Virgin Australia which, if approved, would see a more even playing field in Australian aviation.
According to Virgin chief executive John Borghetti, the deals were designed to accelerate the airline's growth and increase competition in Australia, where the domestic market had long been dominated by Qantas.
He added the acquisitions would boost the presence of Virgin in the budget and regional markets, "enabling us to fast-track our expansion in these areas and become a stronger competitor".