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Air New Zealand has revealed plans to further cement its alliance with Australia’s Virgin Blue by buying a minority stake, but ruled out a complete takeover.
ANZ is in the process of buying between 10 and 14.99 per cent of Virgin Blue, whose largest single shareholder, with 26%, is Sir Richard Branson’s Virgin Group. The final scale of ANZ’s investment will become apparent in the next few days, as it must ensure that its shareholding does not mean that total foreign ownership of Virgin Blue exceeds 49 per cent.
ANZ chief executive Rob Fyfe said there was “no intention” of making a takeover bid for Virgin Blue. However, ANZ said when the alliance was first announced in May last year that it was “not a signal of intention by Air New Zealand or Virgin Blue to take a shareholding in the other”.
The two airlines cemented their initial relationship in December, when Australian competition authorities approved an alliance covering flights across the Tasman Sea between Australia and New Zealand. The alliance allows the two to share revenue and coordinate schedules between regional centres in both countries but does not include domestic travel in either. The two carriers lobbied for it in order to compete against the Qantas group, which includes the budget brand Jetstar.
“The investment in Virgin Blue is part of Air New Zealand’s strategy to develop scale and reach in this region,” Fyfe said.
The partnership was announced only days after Virgin Atlantic chairman Sir Richard Branson admitted that Virgin Atlantic would need the protection of alliance membership if it was to prosper.