Air New Zealand entered (06-Jun-2013) into an agreement to acquire a further 3% of the shares of Virgin Australia, taking its interest to 22.99%. The agreement is subject to customary Foreign Investment Review Board (FIRB) and Australian Competition and Consumer Commission (ACCC) conditions and Air New Zealand has filed the required substantial shareholder notice. Air New Zealand will reportedly consider acquiring up to a further 3% of the shares in Virgin Australia, to the extent it is permitted to do so under the Australian Corporations Act, and has made an application to FIRB on that basis. The ACCC has advised Air New Zealand that it intends to conduct public enquiries to enable it to form a view in relation to these potential shareholdings. The carrier stated the additional interest affirms Air New Zealand’s strong belief and confidence in Virgin Australia and the strategy it is pursuing under the leadership of John Borghetti and his team. Air New Zealand advised is not seeking a position on the Board of Virgin Australia nor does it have the intention of obtaining control of Virgin Australia. [more - original PR Air New Zealand] [more - original PR Virgin Australia]
Air New Zealand increases interest in Virgin Australia to 22.99%
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Having built a regional Asian network anchored around mainland China as a source market, HNA Group's Hong Kong Airlines is leveraging its hub capability from short/medium haul connections to long haul transfers, which also reduce CASK. Hong Kong Airlines resumed long haul flying in early 2016 with a service to Cairns and the Gold Coast. Auckland will be added from Nov-2016 and Hong Kong Airlines should be able to break up the Air New Zealand-Cathay Pacific joint venture on the route.
Hong Kong Airlines is restricted from serving major Australian cities due to bilateral limits (Australia and Hong Kong have not been able to agree on increased capacity levels). Hong Kong Airlines' owner HNA has bought into Virgin Australia, which plans to serve the key HNA hubs of Beijing and Hong Kong in 2017, providing access from major Australian cities. Virgin could also help Hong Kong Airlines make viable service to smaller Australian cities.
Hong Kong Airlines is receiving a lift in Australia and New Zealand bookings, attributed to Asian consumers shifting away from travel in Europe, which has repeatedly been impacted by terrorist acts. Hong Kong Airlines believes that passengers are "viewing Australia and New Zealand together as more of a safe-haven status destination".
South Pacific aviation markets will be defined by China’s expansion
The nature of the South Pacific's geography makes finding the right partners for its airlines essential for their survival in international long haul markets – as most are.
The region is characterised by relatively liberal access regimes and by partnerships of varying levels – in New Zealand especially, where Air New Zealand’s international network is dominated by JVs. Virgin Australia has built a ‘virtual alliance’ alongside HNA, Singapore Airlines, Etihad and Delta, with very little of its own metal flying outside Australia. At Qantas Group, international performance has improved markedly following its Emirates partnership, as its operating focus has shifted from Europe toward Asia and North America, with local JVs, and close partnerships with American Airlines and China Eastern continuing to grow and mature.
For all airlines in the region, the China market will define much of the growth over the coming decade. (This report is taken from the Jul/Aug-2016 issue of CAPA's Airline Leader)