Etihad unsure when to press for bigger stake in Virgin
Etihad chief executive James Hogan says there "is no pressing need" for his airline to gain a seat on Virgin Australia's board, despite it looking to bolster the size of its cornerstone stake.
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.
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