Air New Zealand sells off remaining Virgin Australia stake

Air New Zealand and Virgin Australia remain committed to their trans-Tasman alliance, despite the Kiwi carrier selling its shareholding. (Seth Jaworski)
Air New Zealand and Virgin Australia remain committed to their trans-Tasman alliance, despite the Kiwi carrier selling its shareholding. (Seth Jaworski)

Air New Zealand is no longer a Virgin Australia shareholder after disposing of its remaining 2.5 per cent stake for A$65.7 million.

On Wednesday, the company said in its monthly investor update for October the shares were sold in “off market transactions with investors, including Nanshan Group”.

Indeed, a notice to the Australian Securities Exchange on Thursday showed Nanshan paid $17.86 million for 68,704,484 million shares in an off-market purchase. The buy represented 0.8 per cent of Virgin’s 8.46 billion total shares on issue.

As of Friday afternoon, there have been no other notices from Virgin to the ASX detailing any other changes in substantial holding.

Air New Zealand had held up to 26 per cent of Virgin stock and was the Australian carrier’s largest shareholder. However, it announced it March plans to sell off the Virgin shareholding and Air New Zealand hief executive Christopher Luxon stepped down from the board at that time.

The selldown was completed in June when the compay sold 19.9 per cent of Virgin shares to Chinese conglomerate Nanshan Group, leaving the airline with a 2.5 per cent stake.

The move to offload its residual shareholding in Virgin was flagged at Air New Zealand’s full year results presentation on August 26, when chief financial officer John McDonald said it was the company’s “intention to sell that stake when appropriate”.

Luxon said recently the Star Alliance member’s partnership with Virgin Australia was unaffected by the decision to withdraw from the board and sell its equity stake.

In addition to their alliance on the Tasman, Virgin’s Boeing 737-800s and ATR 72 turboprops undergo maintenance checks at Air New Zealand’s engineering workshops in Christchurch and Nelson, respectively. The pair also has a shared Boeing 777-300ER engine pool.

“There has always been three parts to the relationship,” Luxon tells Australian Aviation in an interview on August 26.

“One has been the shareholding. We’ve obviously exited our shares but that has been a pure, rational investment sort of mindset.

“We’ve got our alliance which continues to go from strength to strength and I think is the best Australasian sort of solution available to customers.

“And then the third piece is yes, we have a lot of operational synergies and tie-ups with each other as well. There is quite a lot operationally that we do together and we will continue to do a lot.”

(Read more about Air New Zealand relationship with Virgin Australia, its full year results and outlook for the year ahead in the October edition of Australian Aviation, on sale now.)

Comments

  1. Vannus says

    Hmmm……very interesting!
    Getting out whilst the getting’s good?

    Less financial backing for VA, which means Etihad, Singapore, & Chinese consortium are left to keep them afloat, with ongoing huge cash ‘injections’.

    Wonder how long they can keep doing that?