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ACCC worries over shareholders vying for Virgin Australia stock

written by australianaviation.com.au | August 9, 2013
With an increased shareholding, would Air New Zealand seek to exert influence over Virgin? (Seth Jaworski)

The Australian Competition and Consumer Commission (ACCC) has halted further consideration of Air New Zealand taking an increased stake in Virgin Australia.

According to a report in The Australian Financial Review, the application to increase the New Zealand carrier’s holding to up to 26 per cent has given the ACCC concerns about the potential for exertion of influence over Virgin Australia. The application comes as Air New Zealand awaits an existing application before the Foreign Investment Review Board to increase its current holding to nearly 23 per cent, which would make it Virgin Australia’s largest shareholder.

The ACCC has sought further information from Virgin Australia and Air New Zealand, delaying a decision until an undetermined future date, until it can be satisfied about the exertion concerns.

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The airline investors are entitled to increase their shareholding by three per cent every six months under the Corporations Act, the mechanism by which Air New Zealand is exercising the current applications.

Etihad has also progressively increased its stake, recently increasing its holding to 10.5 per cent. The airline’s CEO James Hogan last week announced his intention to increase Etihad’s shareholding in Virgin Australia to 20 per cent as part of an ongoing aggressive investment strategy that has seen the Abu Dhabi carrier make several equity purchases in airlines in Europe, Sri Lanka and the Seychelles.

Meanwhile, the effect of increased airline shareholdings is the dilution of Richard Branson’s equity in Virgin Australia. It currently stands at 13 per cent.

At present Etihad holds 10.5 per cent, Air New Zealand 19.9 per cent and Singapore Airlines 19.9 per cent.

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ACCC worries over shareholders vying for Virgin Australia stock

written by australianaviation.com.au | August 9, 2013
With an increased shareholding, would Air New Zealand seek to exert influence over Virgin? (Seth Jaworski)

The Australian Competition and Consumer Commission (ACCC) has halted further consideration of Air New Zealand taking an increased stake in Virgin Australia.

According to a report in The Australian Financial Review, the application to increase the New Zealand carrier’s holding to up to 26 per cent has given the ACCC concerns about the potential for exertion of influence over Virgin Australia. The application comes as Air New Zealand awaits an existing application before the Foreign Investment Review Board to increase its current holding to nearly 23 per cent, which would make it Virgin Australia’s largest shareholder.

The ACCC has sought further information from Virgin Australia and Air New Zealand, delaying a decision until an undetermined future date, until it can be satisfied about the exertion concerns.

Advertisement
Advertisement

The airline investors are entitled to increase their shareholding by three per cent every six months under the Corporations Act, the mechanism by which Air New Zealand is exercising the current applications.

Etihad has also progressively increased its stake, recently increasing its holding to 10.5 per cent. The airline’s CEO James Hogan last week announced his intention to increase Etihad’s shareholding in Virgin Australia to 20 per cent as part of an ongoing aggressive investment strategy that has seen the Abu Dhabi carrier make several equity purchases in airlines in Europe, Sri Lanka and the Seychelles.

Meanwhile, the effect of increased airline shareholdings is the dilution of Richard Branson’s equity in Virgin Australia. It currently stands at 13 per cent.

At present Etihad holds 10.5 per cent, Air New Zealand 19.9 per cent and Singapore Airlines 19.9 per cent.

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