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Virgin Blue in takeover territory - Rex. Asia Pacific airline share wrap

Analysis

Virgin Blue's shares fell another 4.1% yesterday as investors reacted to the airline's plans to reduce domestic capacity by 8%, removing up to five aircraft from service, threatening up to 400 jobs. Virgin Blue executives have also accepted a 30% pay reduction, as part of cost cutting measures.

Regional Express, a smaller regional carrier in Australia, told the Sydney Morning Herald that Virgin Blue is "extremely vulnerable" to a takeover bid, whether "hostile or friendly". Rex has acquired a 1.82% "strategic interest" in Virgin Blue, while Rex's Singaporean investors are also reportedly increasing their interest in Virgin Blue.

Asia Pacific selected airlines daily share price movements (% change): 18-Feb-09

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