Etihad moves up the Virgin hierarchy

Etihad has leapfrogged English entrepreneur Richard Branson to become Virgin Australia's third-largest shareholder, as the Middle Eastern airline closes in on its goal of a 19.9 per cent stake.

Following buying earlier in the week, Etihad notified investors it had boosted its stake in Virgin to 13.4 per cent, up from 12.3 per cent. The Abu Dhabi-based airline appears eager to move up the share register as quickly as it can, with the latest increase coming just a week after its previous buying spree.

Shortly after Etihad's filing to the market on Friday, another block of 26.2 million shares - about 1 per cent of Virgin's stock on issue - changed hands for $11.8 million.

The identity of the buyer of the shares at 45¢ a piece was not immediately known but is expected to be Etihad.

The latest buying on-market means Etihad's stake is now greater than the holdings of Sir Richard's Virgin Group, whose holdings amount to 12.47 per cent.

Sir Richard sold half his stake in the airline he co-founded to Singapore Airlines in April, which made the latter Virgin's second-largest shareholder after Air New Zealand at 23 per cent.

The businessman has made clear he intends to eventually sell his remaining stake because he believes the branding agreement with the airline is far more crucial to him than an equity holding.

Etihad may need to buy a portion of Sir Richard's holdings in order to achieve its goal of 19.9 per cent.

Before he sold part of his stake to Singapore Airlines for about $122 million, Etihad had preliminary talks with Virgin Group executives about buying holdings in the airline from him.

Etihad has approval from the Foreign Investment Review Board to build a stake of as much as 19.9 per cent.

Last week, the competition regulator also said it would not oppose Air New Zealand boosting its stake in Virgin by another 3 per cent to almost 26 per cent under creep provisions.