Singapore Airlines will take a 19.9% share of Virgin Australia in a deal worth $122.6 million, after receiving a green light today from the Australia’s Foreign Investment Review Board.
SQ's strategic stake in its Australian partner is almost double the previous 10 percent holding, with the new shares purchased from Sir Richard Branson's Virgin Group.
“Increasing our stake in Virgin Australia is another example of Singapore Airlines' deep commitment to the important Australian market” said Singapore Airlines CEO Goh Choon Phong.
"It also demonstrates our support for the ongoing transformation of Virgin Australia, which has created a more competitive aviation market in Australia."
Virgin Australia and Singapore Airlines entered into a long-term partnership in 2011, encompassing codesharing, reciprocal frequent flyer programme benefits and lounge access and co-ordinated schedules to provide seamless connections between flights of each airline.
The government's approval of the Singapore Airlines deal comes barely two weeks after Air New Zealand raised its own stake in Virgin Australia to 22.99%, although the NZ flag-carrier maintains it has no intention to obtain control of Virgin Australia or agitate for a seat on the board.
Under Australian takeover rules, companies that own more than 20 per cent of another company can increase their holding by a maximum of 3 per cent every six months without having to make a full bid.
In a statement issued after confirming the higher stakeholding, which remains subject to ACCC and FIRB approval, Air New Zealand said "the additional interest affirms Air New Zealand’s strong belief and confidence in Virgin Australia and the strategy it is pursuing under the leadership of John Borghetti and his team."
Virgin Australia's other vested partner airline is Etihad Airways, which holds a 9.9% stake and has previously suggested it may also increase its shareholding at some stage.
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About David Flynn
David Flynn is the editor of Australian Business Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.