Branding is the key stake in Virgin: Branson

Richard Branson has indicated he is likely to eventually sell his remaining stake in Virgin Australia, emphasising that his branding agreement with the airline is far more crucial to him than an equity holding.

Richard Branson has indicated he is likely to eventually sell his remaining stake in Virgin Australia, emphasising that his branding agreement with the airline is far more crucial to him than an equity holding.

Two weeks after almost halving his stake, Sir Richard would not commit to keeping his remaining 13 per cent holding in Australia's second-largest airline in the longer term.

"We will see," the airline's co-founder said when pressed on the point. "I am happy with the shareholding as is. It's not that important to us ... the most important thing is the branding - the branding relationship we have."

The airline pays royalties to Sir Richard's Virgin Group for the right to use its brand.

His comments came as Virgin Australia chief executive John Borghetti admitted there appeared to be a softening in demand in the domestic market in recent weeks.

"Many industries in general in this country over the last, probably three to four weeks, have been saying they feel a softness. I don't think it's just the aviation industry," he said.

Mr Borghetti, who will notch up three years in the top job on Wednesday, said a period of significant capacity growth in the domestic market had complicated the situation.

Qantas boss Alan Joyce cautioned last week that the airline faced a "tough environment" in the second half due to excess capacity in the domestic market.

Sir Richard took a trademark swipe at Qantas, saying it was facing a competitor whose fleet was growing rapidly and winning corporate customers in large numbers.

"I think Qantas made the biggest mistake by not making [Borghetti] their chief executive," he said. "He came [to Virgin] with a mission to prove Qantas wrong. We are delighted he has gone all out to show they made a dreadful mistake."

Sir Richard and Mr Borghetti were speaking in Perth for the launch of Virgin Australia's regional airline, which includes the 32-strong fleet of recently acquired West Australian carrier SkyWest.

The Skywest acquisition and a deal to take control of Tiger Australia are central to Virgin's plans to set up a dual-branded airline group to challenge Qantas and Jetstar.

"The lack of level playing field that I have spoken about over the years - the playing field is now balancing out and Virgin couldn't be in a better position," Sir Richard said.

Last month, Singapore Airlines bought almost 10 per cent of Virgin Australia for about $122 million from Sir Richard's Virgin Group.

Macquarie Equities analysts have said the sale to Singapore Airlines raised further questions about whether Sir Richard's remaining stake was "in play" because it appeared to have little strategic value.

The analysts believe a logical buyer is Etihad, which has about a 9 per cent stake in Virgin. The Middle Eastern airline has repeatedly made clear its interest in raising its stake.

Asked whether he would be a willing seller to Etihad, Sir Richard said: "We would cross that bridge if it came."

Executives at Virgin have had talks with Etihad on a number of occasions in recent years.

But Sir Richard's right-hand man, Josh Bayliss, said the investment company did not have any immediate plans to sell the remaining stake in the airline.

The reporter travelled to Perth courtesy of Virgin Australia.

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