Air New Zealand has announced it will be increasing its shareholding in Virgin Australia by 3 per cent.
The airline announced today that it had been granted approval from the Australian Treasurer to increase its shareholding to 25.9 per cent.
"The opportunity to take our shareholding in Virgin to 25.9 per cent and the recently extended Tasman Alliance with Virgin mean we can confidently work with Virgin to provide a strongly competitive, Australasian and international airline network," said chief executive Christopher Luxon.
"We are fully supportive of the Virgin management team and strategy which provide an ideal complement to our own network and importantly, an opportunity to participate in the Australian market with a respected partner."
The acquisition was subject to Air New Zealand complying with the 'creep' provisions under the Australian Corporations Act, the company said in a statement released to the NZX.
Air New Zealand announced at its annual meeting last week that it was extending its share buyback scheme for another year.
Its shares having gained 15 per cent this year and were trading at $1.49 this morning. The stock is rated a 'buy', according to the Reuters consensus of six analysts.
Air New Zealand formed a partnership with Virgin, providing links with its flights into Australia, after the failure of its Australian-based airline Ansett in 2001.
Virgin Australia's other major shareholders are Singapore Airlines, Etihad Airways and Richard Branson's Virgin Group. The airline this year announced a loss of $110 million.
The Government is likely to sell down its 73 per cent stake in Air New Zealand to 51 per cent by the end of this year.
- with BusinessDesk