Qatar Airways is reportedly on the brink of acquiring up to a 20% stake in Virgin Australia, as per the Australian Financial Review. This move could significantly enhance Qatar Airways’ strategic positioning in the Australian market, coinciding with Virgin Australia’s potential initial public offering (IPO) expected later this year.
The proposed stake purchase is pending approval from Australia’s Foreign Investment Review Board and the Australian government, which had previously limited Qatar Airways’ expansion efforts in Australia. Virgin Australia, a predominantly domestic airline with a fleet of 94 narrowbody aircraft, also operates short-haul international flights and a long-haul route from Cairns to Tokyo Haneda.
Virgin Australia faced financial difficulties, filing for voluntary administration in April 2020 due to COVID-19 impacts, high debt levels, and strategic missteps. The airline was later acquired by Bain Capital and has since returned to profitability.
Historically, Virgin Australia was supported by significant investments from major international airlines, including Singapore Airlines and Etihad Airways, all of which were wiped out during the administration process. Currently, Bain Capital remains the primary shareholder with a 93% stake, alongside minor shares held by Virgin Group and the Queensland Investment Corporation.
Qatar Airways has developed a robust partnership with Virgin Australia, evident in their extensive codesharing arrangements. This relationship has occasionally positioned Virgin Australia as a preferred partner over Qantas, despite both Qatar Airways and Qantas being members of the Oneworld alliance.
This potential investment by Qatar Airways comes after a controversial period in Australia, where the airline faced backlash for an incident involving the invasive search of female passengers in Doha in 2020. This incident, alongside lobbying from Qantas, likely influenced the Australian government’s hesitance to grant Qatar additional flight rights last year.
With the investment talks progressing and regulatory hurdles ahead, Qatar Airways’ proposed stake in Virgin Australia marks a pivotal step in its expansion strategy within the competitive Australian aviation market.
