Air New Zealand Boosts Virgin Australia Stake, Seeks 3% More

Air New Zealand Ltd. increased its stake to 23 percent in Virgin Australia Holdings Ltd. (VAH), becoming the largest shareholder in Australia’s second-biggest carrier. It may acquire another 3 percent.

Air New Zealand will consider acquiring up to a further 3 percent of Virgin Australia if it is permitted to do so under the Australian Corporations Act, and has made an application to the Foreign Investment Review Board, according to a statement from the Auckland-based carrier. Air New Zealand shares dropped 0.3 percent to NZ$1.465 at 11:44 a.m. in Wellington.

Air New Zealand is the now the largest shareholder in Virgin Australia, according to data compiled by Bloomberg. Virgin Group has a 22.4 percent stake, Singapore Airlines Ltd. (SIA) has 19.9 percent and Etihad Airways PJSC owns 10 percent, the data show. Air New Zealand said it’s not seeking a position on the board of Virgin Australia nor does it intend to take control of Virgin Australia.

“They are defending their patch,” David Fraser, Sydney-based analyst at Nomura Holdings Inc., said by phone. “They want to be at the table when and if Singapore Airlines pushes for a board seat. I’d expect them to push for a board seat, too.”

Virgin is trying to win some of Qantas Airways Ltd.’s 65 percent share of Australia’s domestic market, rolling out business-class services while risking lower ticket prices by adding flights in tandem with the larger carrier. It’s also taking control of Tiger Airways Ltd.’s Australian budget airline and rural service Skywest Airlines Ltd. Virgin last month forecast annual profit would slip for the third time in five years.

Trading volume in Virgin Australia yesterday surged as 125 million shares changed hands in three separate block trades worth A$59 million ($56 million). Trades of 36 million shares, of 77.44 million and of 11.2 million were carried out on Chi-X Australia Pty and priced at 47.5 Australian cents, according to data compiled by Bloomberg. The combined block trades equaled 4.8 percent of outstanding shares in the company, the data show.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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