Etihad has been cleared to double its investment in Virgin Australia to 10%, putting more pressure on Qantas to find a merger partner.
Abu Dhabi-based Etihad invested in Virgin Australia earlier this year, sealing a partnership on 24 flights a week between Abu Dhabi and Australia. The two carriers already code share and offer reciprocal arrangements on frequent flier programmes as well has undertaking joint marketing.
Etihad and the other major Middle East airlines have made major inroads into the market to Australia, particularly from Europe, which has contributed to Qantas’s problems. Earlier this year, Qantas issued a profits warning and said it faced a potential hostile bid after its share price collapsed.
Etihad’s investment in Virgin Australia is one of several it has made in other airlines. It owns 30% of Air Berlin, 40% of Air Seychelles and 3% of Aer Lingus. Its strategy is to form investment partners with carriers to provide it with feed to its hub.