Branson likely to sell Virgin holding

English entrepreneur 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.

English entrepreneur 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 holding of 13 per cent in Australia's second-largest airline in the longer term.

"We will see," the airline's co-founder said. "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," 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 chief executive 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 swipe at Qantas, which he said was facing a competitor whose fleet was growing rapidly and winning corporate customers in "large numbers".

"Qantas made the biggest mistake by not making [Mr Borghetti] their chief executive," he said. "He came 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 at the official 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 ... 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 Virgin Group. Macquarie Equities analysts have said that Sir Richard's sale to Singapore Airlines raised further questions about whether his remaining stake was "in play" because it appeared to have "little strategic value".

The analysts believe a logical buyer is Etihad, whose stake in Virgin stands at about 9 per cent. The Middle Eastern airline has repeatedly made clear its interest in boosting it further because of the strategic importance of its alliance with Virgin.

Asked if he would sell to Etihad, Sir Richard said "we would cross that bridge if it came".

His senior executives at Virgin Group have talked to Etihad on several occasions in recent years.

However, 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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