Now for the Borghetti juggling act
Virgin Australia chief executive John Borghetti has his own corporate family - his four alliance airline partners of which three have equity stakes in the Australian airline.
Keeping them all happy will be stretching even Borghetti's diplomatic skills.
Singapore Airlines on Wednesday proposed to buy 10 per cent of Virgin Australia to take its stake to just under 20 per cent and in doing so it has upset the delicate politics in Virgin's airline family.
Etihad - which is Virgin's alliance partner through the Middle East to Europe has about 8 per cent and isn't happy with Singapore's move.
Etihad's particular beef is that Singapore didn't buy its stake on market. Instead it picked up the 10 per cent from Virgin Australia's founding shareholder, Richard Branson.
This deal will make Singapore the largest shareholder in Virgin Australia, followed by another of its alliance partners, Air New Zealand with about 19 per cent.
Assuming the Foreign Investment Review Board allows Singapore to increase its stake, Branson will no longer be the controlling shareholder.
The response from Etihad will probably be to build its stake to match Singapore. The Middle Eastern airline has stated previously that this was an option.
The reality is that Virgin Australia is a central player for both Singapore and Etihad and both appear to be vying for more control of the Australian airline.
Both players entered into a long-term partnerships with Virgin over the past couple of years, encompassing code sharing, reciprocal frequent-flyer program benefits and lounge access, co-ordinated schedules, and joint sales, marketing and distribution activities.
These arrangements allow Virgin's international business to operate a virtual global network while Virgin gives these offshore players a feeder network for Australian domestic services.
Virgin Australia needs its partners and its partners need Virgin. But the alliance partners don't need each other. Indeed they are competitors on numerous routes around the world and there is generally no love lost between Etihad and Singapore Airlines.
This competition even extends to Virgin services out of Australia. For example, a customer wanting to travel to Europe using the Virgin Australia network could use Etihad via the Middle East or use Virgin's Singapore partner to Asia and then use Singapore to fly on to Europe.
How Borghetti treats these two partners is a juggling act.
Meanwhile, the response to Wednesday's move by Singapore Airlines to move to 19.9 per cent has not sparked speculation that it could mount a takeover bid.
(This doesn't preclude Singapore Airlines from using the creep provisions to build its stake.)
In part this is because industry experts believe the other alliance partners, particularly Etihad would not be sellers.
Earlier this week Singapore Airlines further cemented its relationship with Virgin Australia. Singapore Airlines-controlled Tiger Airways sold 60 per cent of its Australian subsidiary, Tiger Australia, to Virgin.
This has been received positively by the market, albeit with question marks over how how long it will take to resuscitate the ailing Tiger.
Singapore makes it clear that Australia - which accounts for about 18 per cent of its global business - is a very important market.
For its part, Etihad has demonstrated that it likes to retain close ties with its international partners and has a history of taking equity positions in most of them. But it has also stated that it has no interest in buying control of Virgin Australia.
Reports out of New Zealand suggest Air New Zealand could be willing to lighten its stake in Virgin so it might be getting a call from Etihad's boss, James Hogan.
Whether Branson is a seller of his remaining 13 per cent of Virgin is a matter for conjecture.
Once established he will sell down or get out completely - leaving his legacy brand rental agreement in place.
Borghetti has been a world pioneer in the creation of an international virtual network, but in doing so he will need to deal with one of the most incestuous industries in the world.
Frequently Asked Questions about this Article…
Singapore Airlines proposed buying an extra 10% of Virgin Australia to take its stake to about 19.9%, making it the largest shareholder (subject to Foreign Investment Review Board approval). For investors this matters because it shifts the balance of control among alliance partners and could influence Virgin Australia's strategic direction and partnerships.
According to the article, Singapore Airlines moved to about 19.9%, Air New Zealand holds roughly 19%, Etihad owns about 8%, and Richard Branson retained around 13% before the recent sale. These stakes shape how alliance partners interact and influence corporate decisions.
Etihad was upset because Singapore Airlines bought its additional stake directly from Richard Branson rather than purchasing on the open market. That move disrupted the delicate politics among Virgin Australia's alliance partners and could prompt a competitive response.
The article says the move to about 19.9% hasn't sparked takeover speculation. However, it notes Singapore Airlines could use 'creep' provisions over time to build a larger stake, and any larger takeover would be constrained by other partners who are unlikely to sell.
The article suggests Etihad could respond by increasing its own stake to match Singapore's — a step Etihad has previously indicated was an option. Etihad has also said it has no interest in buying control of Virgin Australia, so any response would likely be an equity increase rather than an attempt at control.
Borghetti has to juggle competing alliance partners — notably Singapore Airlines and Etihad — while keeping them happy. The article describes this as a diplomatic juggling act because those partners are also competitors on many routes, and Virgin relies on them for international feed while they benefit from Virgin's domestic network.
The partnerships include code sharing, reciprocal frequent‑flyer benefits and lounge access, coordinated schedules, and joint sales, marketing and distribution. For investors, these arrangements create a 'virtual global network' that expands Virgin's international reach without owning fleets abroad, potentially strengthening revenue from international feed into domestic services.
Singapore Airlines‑controlled Tiger Airways sold 60% of its Australian subsidiary, Tiger Australia, to Virgin Australia. The market received the deal positively, though the article notes questions remain about how long it will take to turn around the ailing Tiger business.
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