Branson Says Several Suitors for Virgin Australia Stake

Branson on Talks for Air NZ's Stake in Virgin Australia
  • ‘Number of different parties’ holding talks, Branson says
  • Air New Zealand has said it may exit Australian airline

Air New Zealand Ltd.’s stake in Virgin Australia Holdings Ltd. has attracted several potential buyers and talks are under way about a possible deal, said Richard Branson, the billionaire founder of Virgin Group Ltd.

It’s not yet clear whether Virgin Group itself, which owns about 10 percent of Virgin Australia, will increase its stake in Australia’s second-largest airline, Branson said in an interview with Bloomberg Television from Sydney on Thursday.

“There are discussions going on with them and a number of different parties and we will watch with interest what happens,” Branson said. “Whether or not we will end up buying it, we will have to see. I am a great believer in Virgin Australia.”

Virgin Australia shares were unchanged at 27.5 Australian cents  at 12:51 p.m. in Sydney, valuing the Brisbane-based company at A$970 million ($699 million).

Air New Zealand, the biggest investor in Virgin Australia, in March said it may sell its 26 percent stake as Virgin Australia carries out a capital review. Morgan Stanley estimated last month that the Australian airline needs a further A$700 million of funds. 

Add a Lot

Other than Virgin Group, Virgin Australia is almost equally owned by Air New Zealand, Etihad Airways PJSC and Singapore Airlines Ltd. The potential exit by Air New Zealand has stoked speculation that Singapore Air will snap up the stake to stop an unwelcome foreign airline muscling in, or buy the stake jointly with Etihad.

“There have been approaches from airlines that are considerable and I think that add a lot to Virgin Australia,” Branson said. “Those discussions are going on. So I cannot, I am afraid, go into details.”

In North America, Branson has been selling rather than buying. Seattle-based Alaska Air Group Inc. last month agreed to buy California-based Virgin America Inc. for $2.6 billion.

Branson said he was opposed to the deal but didn’t have enough voting shares to block it. Just back from Seattle, Branson said he is keen to see the Virgin America brand survive.

Virgin Ethos

“If they decide not to keep the brand, we’ll start again in America and we have some plans if it doesn’t happen,” he said. “I think Alaska, when they do their research, will realize that what they bought was the Virgin America ethos and to destroy that would destroy the value of what they spent in buying it.”

Branson’s space company, Virgin Galactic, is seeking to shake up the $6 billion commercial launch business. The company said at the end of last year that it plans to send small rockets in-flight from a Boeing 747-400 aircraft. Virgin’s SpaceShipTwo venture was grounded after a training accident killed a pilot in 2014.

Branson said he’s still hoping to take customers to the edge of space this decade.

“Otherwise, I would have miscalculated very badly indeed,” he said. Once missions have been approved, Branson said he’ll go up himself first.

“The new spaceship has been born and it’s starting its test programs at the moment and over the next few months our brave test pilots will be putting it through its paces, taking it into space,” he said.

Branson, who lives in the British Virgin Islands, said he’d be “devastated” if Britain pulled out of the European Union. Britons vote on whether to remain in the 28-nation bloc in a June 23 referendum.

“I just hope that sense prevails and when push comes to shove, people will realize it would be enormously damaging both to Europe and to Great Britain if Britain was to walk away,” he said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE