UAE Carrier Gets 3.96% Stake in Virgin Australia

12th Jun 2012

Dubai: It has been confirmed by Etihad officials that the flag carrier of the United Arab Emirates has acquired 3.96% stake in Virgin Australia.

The airline has been in a buying spree of stakes in overseas carriers around the world.

Airline officials claimed that purchase of stakes like this has been done in an open market where struggling or cash-strapped airlines need some fresh funds to stay in the business.

The acquisition, though minor, is a significant investment for Etihad Airways in the domestic operations of Virgin Australia. The minor stake, they said, will solidify their union through years of being business partners. They claimed that through this alliance, it will enhance the travel experience of both (Etihad and Virgin) their customers, either within Australia or visitors to the continent.

The almost 4 percent stake acquired in Virgin Australia is the latest and the fourth such acquisition by Etihad in a foreign carrier outside its home country. Etihad started its buying spree in December 2011, when it acquired a staggering 30% stake in Germany's second largest airline, Air Berlin. It was followed in February this year by an even bigger purchase of Air Seychelles, acquiring 40% stake. Also a recent acquisition, its 3% stake in Aer Lingus, was made just recently.

Airline officials, though, keep mum about its future plans with regards to more investments on Virgin.

Virgin Australia started as Virgin Blue when it was launched in 2000, until May 2011, when it got its present name. The Virgin Group of Richard Branson owns a significant 26% of the local subsidiary as well as Air New Zealand. Incidentally, Air New Zealand also has an alliance with the carrier.

The acquisition is part of the UAE flag carrier's effort to invest in foreign carriers across the globe in the hope of gaining advantage over its rivals.

The Abu Dhabi carrier's CEO, James Hogan, told the media that the investment in Virgin Australia, though minor, is part of his company's action plan for growth.

Etihad Airways is one of the world's fastest growing airlines. The tremendous growth is attributed to its strategic planning on pursuing growth opportunities in the aviation industry. The network expansion also allows the airline to explore growth opportunities.

The airline, after 8.5 years in business, finally made profits in 2011. The profit could help them improve more on areas where they need to.

Both airlines, Etihad and Virgin Australia, operate 24 flights per week between the two countries. Passengers from both carriers shall have access to a combined of more than 150 destinations.

Etihad started its service Down Under in 2007, when it commenced its service to Sydney. It expanded its reach to Brisbane and Melbourne soon after, and has served nearly 2.2 million customers since then.