Qatar Airways Acquires 25% Stake in Virgin Australia
Qatar Airways Group has announced its acquisition of a 25% stake in Virgin Australia (VA, Brisbane International), solidifying an existing non-equity strategic partnership and concluding months of speculation about a potential deal. This significant investment will also enable Virgin Australia to resume long-haul international operations by wet-leasing aircraft from Qatar Airways, allowing the Qatari carrier to circumvent current access limitations to Australia’s major airports.
In a statement released on October 1, 2024, Qatar Airways highlighted that this minority stake is a key investment ahead of Virgin Australia’s anticipated return to public ownership. While the transaction’s value remains undisclosed, Bain Capital, the private equity firm currently managing Virgin Australia, will see its controlling stake reduced to less than 70%. Virgin Group’s 5% stake and the 2.5% share held by the Queensland Investment Corporation will remain unchanged.
Bain Capital partner Mike Murphy expressed enthusiasm about welcoming Qatar Airways as a partner at this critical juncture for Virgin Australia. “We are pleased to welcome Qatar Airways Group as a partner at this stage,” Murphy stated, reflecting the positive outlook for the airline’s future.
Qatar Airways (QR, Doha Hamad International) already has a strong presence in the Australian market, operating flights to Sydney Kingsford Smith, Melbourne Tullamarine, Brisbane International, Perth International, and Adelaide International. However, a bilateral air services agreement currently limits the airline to a cumulative 28 flights per week across the first four airports. Qatar Airways’ previous request to lift this cap was denied by the Australian government last year, likely influenced by lobbying from its Oneworld partner, Qantas (QF, Sydney Kingsford Smith). Now, with the agreement to wet-lease aircraft from Qatar Airways, Virgin Australia aims to launch its own flights to Doha, effectively navigating the restrictions imposed by the government.
“Subject to Australian Competition and Consumer Commission (ACCC) permission, this cooperation will enable Virgin Australia to launch flights from Brisbane, Melbourne, Perth, and Sydney to Doha,” the statement noted. The proposed wet-lease services are expected to commence in mid-2025, allowing Virgin Australia to evaluate the feasibility of operating widebody aircraft while enhancing local competition for long-haul travel in Australia.
Virgin Australia Group CEO Jayne Hrdlicka characterized the deal as the “missing piece” in the airline’s long-term strategy, emphasizing its significance for the future of Australian aviation. “Qatar Airways has been a valued codeshare partner of Virgin Australia since 2022,” she remarked. “This investment will deepen an already strong partnership by bringing critical scale and the best industry expertise to support our long-term competitiveness and growth.”
In early September, during an aviation conference in Brisbane, Hrdlicka had downplayed rumors of Qatar Airways’ interest in acquiring a stake, dismissing them as mere speculation. However, the confirmation of the partnership marks a pivotal development for both airlines.
Qatar Airways Group has recently invested in various airlines, including a 25% stake in Airlink (South Africa) (4Z, Johannesburg O.R. Tambo) and a pending acquisition of 49% in RwandAir (WB, Kigali). It also holds stakes in Cathay Pacific (CX, Hong Kong International) and LATAM Airlines Group.
“This alignment of our two airlines is significant, and the relationships are deep,” stated Qatar Airways Group CEO Badr Mohammed Al-Meer. He emphasized the positive impact of competition in aviation, noting that it enhances the overall service quality and ultimately benefits consumers.
The acquisition is subject to approval from Australia’s Foreign Investment Review Board, and Virgin Australia’s plans for services to Doha will require ACCC endorsement before implementation.
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com