Air New Zealand has confirmed it will take a stake in Australian carrier Virgin Blue, but has denied any intention of a full takeover.
Shares acquired in an off-market transaction took Air New Zealand’s interest in the company to 14.99 per cent.
Air New Zealand financed the deal with existing cash resources, paying A$145 million or 44 cents per share.
However, the acquisition marks the limits of Air New Zealand’s present ambitions.
“This is simply an investment in Virgin Blue that reinforces Air New Zealand’s strategy to grow its business in Australasia which is continually evolving as a single aviation market,” said chief executive Rob Fyfe.
“The Tasman alliance with Virgin Blue was a key step in this strategy.
“This investment cements the important relationship between our two airlines and demonstrates the confidence we have in Virgin Blue and its management to grow their business both within the Tasman alliance and beyond the scope of the alliance,” added Mr Fyfe.
Virgin Blue serves 28 destinations in Australia from its Brisbane hub
He went on to explain Air New Zealand will not be seeking representation on the Virgin Blue Board for at least six months and noted any representation would be a decision for the Virgin Blue Board and shareholders.
“The investment provides us with an interest in the number two airline in Australia and, through this, access to the opportunities in the growing Australian domestic market,” continued Mr Fyfe.
“Air New Zealand has no intention of entering the Australian domestic market in its own right.”
Following confirmation of the deal, the Australian competition regulator launched an information review.
The regulator confirmed interested parties would have until February 4th to submit comments on the deal.