Etihad Airways announced (02-Sep-2012) it increased its equity stake in Virgin Australia to 10%, representing 221 million shares in the carrier. This follows Etihad Airways receiving approval from Australia's Foreign Investment Review Board (FIRB) to increase its stake from 5% to 10%. Etihad Airways CEO James Hogan said, "We are very pleased to have reached this threshold. We support the management strategy of Virgin Australia and will continue to work closely with them on ways to improve our business." Mr Hogan also reiterated Etihad Airways is not interested in becoming a majority shareholder or taking control of Virgin Australia. Mr Hogan said the stake "further cements our commercial partnership as we continue to explore areas of even closer co-operation such as operational synergies, shared IT infrastructure and other forms of cost sharing efficiency." [more - original PR - Etihad Airways] [more - original PR - Virgin Australia]
Etihad Airways increases stake in Virgin Australia
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Virgin Australia realigns its airline partnership priorities on new long haul strategy: Part 1
There have recently been important shifts in Virgin Australia's partnership relations, as Air New Zealand withdraws its ownership and the roles of Singapore Airlines and Etihad evolve with HNA becoming a substantial shareholder. As a consequence, Virgin is restructuring its long haul network for the first time in over two years. Individual changes are not significant, but they help tie up loose ends in Virgin's strategy. Virgin and its US JV partner Delta have been static since United and Qantas-American Airlines greatly altered the Australia-US market profile, a route which constitutes most of Virgin's long haul network.
Virgin struggled to find a use for what was essentially leftover aircraft capacity that it allocated to Sydney-Abu Dhabi as part of a JV with Etihad. With a limited fleet, North America beckoning, and Etihad seemingly losing some lustre since a Virgin-Singapore Airlines partnership, Virgin is having to cut Sydney-Abu Dhabi to free up capacity to relaunch Melbourne-Los Angeles.
Virgin will still commit to its Etihad partnership by adding three weekly Perth-Abu Dhabi flights on the A330-200, which will finally be moved out of the domestic market and deployed long haul. Since the end of the West Australian mining boom, these well equipped aircraft are no longer needed on transcontinental domestic service. Virgin's fleet of five 777-300ERs now will exclusively be used on Los Angeles.
Brexit follow-up Part 3: Gulf airlines, Turkish lose UK ally in M/E talks as protectionism spreads
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What Air France and Lufthansa need is a real, lasting solution, rather than persevering Canute-like with stonewalling. Although a partnership seems logical, they may have waited too long. The Gulf airlines have found that they can succeed on their own.