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Qatar Airways eyes Australian routes as it picks up minority stake in Virgin

SYDNEY (Reuters) -Qatar Airways will buy a 25% stake in Australia’s No. 2 airline Virgin Australia from U.S. private equity firm Bain Capital, the companies said on Tuesday, as the Gulf carrier looks for access into Australian routes that the government denied last year.

The purchase of the minority stake for an undisclosed amount gives more scale for Virgin Australia to pursue an initial public offering and better compete with rival Qantas Airways, which dominates the domestic aviation market and has pushed back against giving more access to the Middle Eastern carrier.

The deal will now need to be signed off by Australia’s government, which denied Qatar Airways’ requests last year to fly additional services into Sydney, Melbourne, Brisbane and Perth.

“This partnership brings the missing piece to Virgin Australia’s longer-term strategy,” Virgin Australia CEO Jayne Hrdlicka said in the statement.

The stake sale also serves as a cornerstone investment ahead of an anticipated return of Virgin Australia into public ownership, the companies said.

Bain said last year it would explore an IPO of Virgin Australia, which it bought for A$3.5 billion ($2.42 billion) including liabilities after it was placed in voluntary administration in 2020.

Bain was targeting an A$1 billion listing, but the plans were delayed, Reuters reported last year.

Bain declined to comment further on the IPO plans.

GOVERNMENT APPROVAL

As part of the deal with Qatar Airways, Virgin Australia plans to launch flights from Brisbane, Melbourne, Perth and Sydney to Doha with leased aircraft by mid-2025, subject to approval from Australia’s competition regulator.

That would allow Qatar to gain more traffic to its Doha hub, regardless of whether the Australian government approves Qatar Airways’ push for more flying rights.

The denial last year brought the Australian government’s relationship with Qantas, which lobbied against more access for the Qatari carrier, into the limelight. Qantas has a partnership with Dubai-based Emirates, a fierce rival of Qatar Airways.

Qantas did not respond immediately to a request for comment.

Qatar Airways CEO Badr Mohammed Al Meer said his airline believed competition in aviation was “a good thing and it helps raise the bar, ultimately benefiting customers.”

Australia’s Foreign Investment Review Board must approve the sale of the Virgin Australia stake to Qatar Airways, but the treasurer has the power after that to accept or reject the recommendation and impose conditions on the deal.

“It wouldn’t be appropriate for me to pre-empt that process or comment further,” Australian Treasurer Jim Chalmers told reporters after the deal was announced. “More broadly, we do want to see a strong, secure airline industry that delivers for consumers.”

Qatar Airways also owns minority stakes in British Airways owner IAG, Hong Kong’s Cathay Pacific Airways (OTC:CPCAY) and China Southern Airlines.

($1 = 1.4474 Australian dollars)


Source: Economy - investing.com

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