Etihad increases stake in Virgin Australia

By Marc Castro

Oct 10, 2013 12:25 PM EDT

Etihad Airways of Abu Dhabi had recently increased its shareholdings in Virgin Australia, doubling the volume to the maximum legal shareholdings of 9.9%. This is a clear indication of Etihad's valuation of Virgin Australia as a strategically important airline partner.

In strengthening the alliance between the two air carriers, it would be better able to compete against the established partnership of Dubai based Emirates Airlines and the Australian flag carrier Qantas. This partnership was launched last March and is considered as among the foremost partnerships in the airline business.

Etihad originally owned 9% of Virgin Australia and as of late was making purchases of the shares of the Australian company at the Australian stock exchange. After the latest purchases, Etihad now owns a total of 515 million shares of Virgin Australia.

It is not known if any of the shares recently purchased by Etihad came from Virgin Group CEO Richard Branson. Branson had previously said he would sellling his remaining 13% shareholdings after he sold 10% to Singapore Airlines. This sale put Singapore Airlines' shareholdings in Virgin Australia at 19.9%.

In a statement, Etihad CEO and President James Hogan said, "We are delighted to have reached this milestone. It reflects our strong support for the business strategy and management team of Virgin Australia and our enduring commitment to the Australian market. It also reflects the close working relationship between our two airlines and we look forward to strengthening its commercial foundations."

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