Air New Zealand at ease with Virgin
As the largest investors jostle for position, Mr Luxon said he preferred the shareholders allowed Virgin boss John Borghetti to focus on running
the airline than pushing for board seats.
Air New Zealand became the largest shareholder last month when it raised its stake from 20 per cent to 23 per cent. It still needs approval from the Foreign Investment Review Board to increase it by a further 3 per cent to 26 per cent. Singapore
Airlines is the second-largest at 20 per cent.
Mr Luxon also reiterated that he did not intend to push for board representation.
"We would look at that down
the road but at the moment we have no intention to pursue a board seat and we have no intention to go higher than where we are," he said.
Etihad has gained foreign investment approval to lift its stake in Virgin from 10 per cent to 19.9 per cent, but its dilemma will be sourcing a large block of shares on a tightly held register.
Mr Luxon said the rationale for Air New Zealand's investment in Virgin was an exposure to a larger and growing domestic market in Australia. "The move from 20 to 26 per cent ultimately is purely for just us looking at a portfolio weighting," he said.
In the short term, the bigger concern for Air New Zealand and Virgin will be stronger competition on trans-Tasman routes from Qantas and its new bedfellow Emirates.
"You have got some very formidable competition there. I don't see it getting it easier," Mr Luxon said.
But he believed there was still room to grow on trans-Tasman routes due to its alliance with Virgin, which gave valuable access to a large sales and distribution network.
Frequently Asked Questions about this Article…
Air New Zealand recently raised its holding in Virgin Australia from 20% to 23% and has said it is comfortable with a 26% stake. It still needs approval from the Foreign Investment Review Board to increase its holding by a further 3% to reach 26%.
Air New Zealand boss Christopher Luxon has reiterated that the airline has no current intention to pursue board representation at Virgin Australia. He said the company might consider it down the road, but for now prefers to let Virgin’s CEO John Borghetti focus on running the business.
Yes. Etihad has gained foreign investment approval to raise its stake in Virgin Australia from 10% to 19.9%. However, Etihad faces the practical challenge of sourcing a large block of shares on what is described as a tightly held register.
After Air New Zealand’s recent increase to 23%, it became the largest shareholder. Singapore Airlines is the second-largest at around 20%. Etihad currently holds 10% but has approval to lift that to 19.9%.
Christopher Luxon said the investment gives Air New Zealand exposure to Australia’s larger and growing domestic market. He described the move from 20% to a potential 26% as primarily a portfolio-weighting decision.
Luxon flagged stronger competition as a near-term concern, particularly from Qantas and its new partner Emirates. He described that competition as formidable and said he doesn’t see it getting easier.
Yes. Despite tougher competition, Luxon believes there is still room to grow on trans-Tasman routes. He pointed to the alliance with Virgin as providing valuable access to a large sales and distribution network that supports growth.
Although Etihad has regulatory approval to raise its stake to 19.9%, the article notes a practical dilemma: finding a large block of shares to buy on a tightly held share register, which could make the increase difficult to execute.
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