Air New Zealand is looking to sell all, or part, of its 26 per cent shareholding in Virgin Australia to focus on its own growth opportunities.
The airline said in a statement to the Australian Securities Exchange (ASX) and New Zealand stock exchange (NZX) on Wednesday – Air NZ is dual-listed – it was “exploring options with respect to its shareholding” in Virgin.
Options included a possible sale of all, or part, of its shares in Virgin. Air NZ said First NZ Capital and Credit Suisse were advising the company in this matter.
Air NZ chairman Tony Carter says his airline’s review of its financial investment in Virgin would look at “possible alternate uses of capital currently deployed in Virgin Australia”.
Further, Carter says Air NZ “does not want a large minority equity position in Virgin Australia as it focuses on its own growth opportunities”.
Air NZ’s move comes a week after it and Virgin’s three other major shareholders agreed to provide Virgin a $A425 million 12-month loan to boost its balance sheet while the airline group conducted a capital review.
Each of the four major shareholders’ contribution to the loan, which Virgin said at the time was based on “arm’s length commercial terms”, was in proportion to their relevant interest in Virgin. Air NZ’s contribution totalled $A131.2 million.
“Air New Zealand intends to coordinate its review of its investment in Virgin Australia with that airline’s broader capital structure review, and looks forward to continuing its strong relationship with Virgin Australia and working constructively together,” the company said.
Air NZ chief executive Christopher Luxon has immediately resigned from the Virgin board.
Luxon said he looked forward to continuing Air NZ’s alliance with Virgin on trans-Tasman services, adding that Air NZ was supportive of the “significant transformation” that has taken place at the Australian carrier under chief executive John Borghetti over the past five years.
“We look forward to continuing our partnership on the Tasman alliance, providing customers of both airlines with the most comprehensive trans-Tasman network,” Luxon said in the statement.
Earlier on Wednesday, Virgin requested its shares be placed in a trading halt ahead of the Air NZ announcement.
Virgin shares were at 38 cents at the time the stock was placed in a trading halt.