Virgin Australia, buoyed by yield growth, to split company to allow further foreign ownership

The re-positioned Virgin Australia will change its corporate structure to split into different companies its international and domestic networks in order to allow for further international investment. In doing so Virgin Australia is converging two market nuances.

First, Australia and New Zealand are unique in allowing 100% foreign ownership of domestic airlines. The Virgin Australia Group (and its predecessor the Virgin Blue Group) has been flying international routes for most of its 11-year history, subjecting the company to not being foreign owned by more than 49%. This cap was briefly breached when Air New Zealand took a stake but rectified with a slightly decreased stake from ANZ. By splitting its domestic and international operations into two companies, the new holder for international operations - the unlisted Virgin Australia International Holdings - can comply with foreign ownership requirements while the domestic operation company - Virgin Australia Holdings - will face no foreign ownership restriction.