Etihad unsure when to press for bigger stake in Virgin
Three days after Virgin warned it faces an annual loss of up to $110 million, Mr Hogan reiterated his support for its management's strategy, which is focused on turning the airline into an upmarket competitor to Qantas.
"They are just going through a tough patch," he said. "We believe in the strategy of Virgin Australia ... and I think they have done a good job in the marketplace under tough conditions."
Mr Hogan said Etihad still wanted to raise its stake in Virgin to 19.9 per cent but had not decided how quickly it would attempt to do so.
Etihad boosted its holdings in Virgin to 10.5 per cent last month, after gaining approval from the Foreign Investment Review Board to go as high as 19.9 per cent.
"The pace of that [likely increase in holdings] I can't determine but we are committed to our strategy of working with Virgin Australia," he said, adding he had not asked for a seat on Virgin's board.
"At the end of the day the board has to ask you as a shareholder," he said. "The board of Virgin Australia are very competent. There is no pressing need for us to sit on the board."
Any push for a board seat is expected to spark a race among Virgin's three large airline shareholders for representation.
Air New Zealand became Virgin's largest shareholder in June when it raised its stake from 20 per cent to 23 per cent, and intends to buy a further 3 per cent. Singapore Airlines is the second largest at 20 per cent.
Macquarie Equities analysts believe two of the three airline shareholders - or all three - could launch a takeover offer for Virgin.
But Mr Hogan said Etihad would prefer to "keep at arm's length".
"What is important to me is that the CEO and the management team have the right strategy," he said.
Etihad has had a strategy of buying cornerstone stakes in airlines around the world, including Air Seychelles and Air Berlin. It expects to complete the purchase of a 24 per cent stake in India's second-largest airline, Jet Airways, within a week.
Meanwhile, Jetstar chief executive Jayne Hrdlicka said she hoped its affiliate airline, Jetstar Hong Kong, would be flying by the end of this year after recently submitting an application for an airline licence.
In June, a company founded by billionaire Stanley Ho bought a third of Jetstar Hong Kong.
Qantas and China Eastern each have a 33 per cent stake in the budget airline.
Frequently Asked Questions about this Article…
Etihad recently boosted its holding in Virgin Australia to 10.5% after gaining approval from the Foreign Investment Review Board (FIRB) to go as high as 19.9%. Etihad says it still wants to raise its stake to 19.9% but has not decided how quickly it will try to do so.
According to Etihad CEO James Hogan, there is 'no pressing need' for Etihad to sit on Virgin Australia’s board. Hogan said he has not asked for a board seat, believes Virgin’s board is competent and would prefer to keep at arm’s length while supporting the management team and strategy.
Etihad has reiterated support for Virgin Australia’s management and its strategy to become a more upmarket competitor to Qantas. The comments came shortly after Virgin warned it could face an annual loss of up to $110 million; Etihad described this as a tough patch but said it believes in Virgin’s strategy and management.
The article says Air New Zealand became Virgin’s largest shareholder in June by raising its holding from 20% to 23% and intends to buy a further 3%. Singapore Airlines is listed as the second-largest at 20%, and Etihad currently holds 10.5%.
Macquarie Equities analysts suggested two of the three large airline shareholders—or possibly all three—could launch a takeover offer for Virgin. Etihad, however, said it would prefer to remain at arm’s length rather than push for control.
Etihad has followed a strategy of buying cornerstone stakes in other carriers, including Air Seychelles and Air Berlin. The article also notes Etihad expected to complete the purchase of a 24% stake in India’s Jet Airways within a week.
FIRB approval allowed Etihad to increase its holding in Virgin Australia up to 19.9%. That regulatory clearance is what enabled Etihad to lift its stake to 10.5% and leave open the option to buy more up to the approved limit.
Jetstar chief executive Jayne Hrdlicka said she hoped Jetstar Hong Kong would be flying by the end of the year after submitting an application for an airline licence. In June, a company founded by billionaire Stanley Ho bought a third of Jetstar Hong Kong. The article also notes Qantas and China Eastern each hold a 33% stake in the budget airline venture.
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