Air NZ Dismisses Reports of Virgin Australia CEO Meeting

13th Apr 2016

Earlier reports in Australian and New Zealand media suggested that Air New Zealand Chief Executive Officer Christopher Luxon has cleared his schedule and is traveling to Australia for a meeting with Virgin Australia brass. The purpose of this meeting was supposed to be the sale of Air NZ's stake in the Australian carrier.

However, as the New Zealand airline stated today, those reports are not true. Luxon will not be meeting Virgin Australia CEO John Borghetti.

A spokeswoman for the national New Zealand carrier Marie Hoskings dismissed these reports, saying Luxon will not be traveling outside the country this week.

Air New Zealand is currently the biggest of the four Virgin Australia's shareholders with a 26 per cent stake in the company. However, in March Air NZ announced it will review its stake in the Australian airline, with the possibility of selling all or part of it. Its shareholding in Virgin is worth around $355 million.

Air NZ, which is owned 53 per cent by the government bought into Virgin in 2011, forming at the same time a trans-Tasman alliance with the Australian carrier. Should it sell its shares there, this alliance would not be affected.

Although he couldn't comment on a potential buyer for Air NZ's shares, Robert Mercer, Head of Research at Forsyth Barr said about Air New Zealand reviewing its stake at VA and the possibility of exit at the current price:

"It gets a big tick from us. It would make perfect sense for them to sell the whole thing. The last thing they want to do at the moment is to get distracted putting more and more capital into foreign investment. That decision should be very doable in the current market."

Virgin Australia's biggest competitor Qantas is also looking at the potential sale with great interest and, as Alan Joyce the CEO there says, whoever the buyer is, Qantas expects competition to remain fair.

Joyce said:

"What we're after is a sensible, stable market where everybody has the same rules to apply to."

Beside Air New Zealand, Virgin Australia's shareholders also include Singapore Airlines, Etihad and Virgin Group.