Air NZ Flags a Full or Partial Sale of its Virgin Australia's Share
31st Mar 2016
Air New Zealand, the biggest shareholder of Virgin Australia, announced today that it is going for a full or partial sale of its stake in the Australian carrier. The Kiwi airline owns 26 per cent of Virgin Australia, which is worth about $342.5 million, per Tuesday's closing share price.
Chief executive of Air New Zealand Christopher Luxon said Virgin has full support on their part for its transformation from a budget carrier to a diversified airline group over the past five years under John Borghetti at its helm.
Mr Luxon said in a statement:
"We look forward to continuing our partnership on the Tasman alliance, providing customers of both airlines with the most comprehensive trans-Tasman network."
Following Air New Zealand's review Mr Luxon will be resigning from Virgin Australia's board of directors, effective immediately.
Tony Carter, Chairman at Air NZ also explained this Wednesday that his company is looking to focus more on its own prospects and no longer wants a large minority equity position in the Australian airline.
After receiving Air NZ's report, Virgin said it will continue on to aim for improved profitability. The budget airline also said it will continue its transformation from budget to diversified airline and its capital structure review, which it announced on 21st March, 2016.
Last week, Virgin contacted four of its biggest shareholders, including Etihad Airways, which owns 24 per cent stake, Singapore Airlines, with 15.6 per cent take and Virgin Group, which has 10 per cent share in Virgin Australia, and of course Air New Zealand (26 per cent) for a $425 million loan/
According to latest reports, Virgin Australia is worth around $1.2 billion. Its shares now stand at 34 cents, after dropping 3.5 cents. The airline also posted a $45.7 million net profit in the half year up to the month of December, which was a turnaround from the $53.1 million net loss it posted in the same period last year.
Last month, Virgin Australia said it expects to see a gain from expected oil price fall in the second half of this fiscal year.