Virgin calls in lawyers over Qantas attack
Virgin Australia has upped the stakes in its public stoush with Qantas by threatening legal action against its rival's chief executive, Alan Joyce, for his remarks about its $350 million capital raising.
In an escalation of the slanging match between the two, Virgin has hired lawyer Leon Zwier to determine whether it has grounds to launch legal action. The airline's concern is that Mr Joyce's comments will have an impact on its capital raising - the retail component of which is still to take place - and its share price.
Qantas dismissed the threats, saying it was comfortable with the statements it had made. Mr Joyce emailed Qantas' 30,000 staff on Monday, urging them to lobby their MPs to intervene and block the capital raising.
He met federal Transport Minister Warren Truss and Labor's transport spokesman Anthony Albanese in Canberra on Wednesday to raise concerns about "predatory" state-backed airlines pumping more cash into Virgin to undermine Qantas on domestic and international routes.
Neither side would be drawn publicly into the stoush but it is understood politicians were left unclear as to what exactly Qantas wanted them to do. Mr Joyce has already conceded that the government has no appetite to change the Qantas Sale Act, which limits foreign ownership.
After a fiery annual meeting in Brisbane on Wednesday, Virgin has agreed to review whether to lift a cap on the amount of unallocated shares from its capital raising that retail investors can snap up. The Australian Shareholders Association had earlier threatened to drag Virgin through the Takeovers Panel on Thursday unless it raised the 40 per cent limit for retail investors.
Depending on the take up of new shares, the raising could allow Virgin's three main shareholders - Etihad, Singapore Airlines and Air New Zealand - to increase their combined stake to as much as 72 per cent.
ASA spokesman Stephen Mayne said small investors faced being squeezed out in the capital raising as Virgin had "gone to extraordinary lengths to make sure" the three big shareholders were able to take up any shortfall.
But Virgin chairman Neil Chatfield took exception to Mr Mayne's claim that it had "artificially engineered" the capital raising to allow the three major shareholders to boost their stakes. He insisted the structure was fair and that retail shareholders were encouraged to buy the new shares.
Earlier, Mr Chatfield accused Qantas of "an orchestrated media campaign regarding this capital raising".
"Let me assure you that we have instructed legal advisers to act for us in dealing with this matter [with Qantas]," he told shareholders.
Virgin chief executive John Borghetti also lashed out again at what he described as the "false allegations made by our major competitor". He said his long-term plan to remake Virgin was devised well before the three airlines gained stakes.
"To say that Virgin Australia is driven by a strategy of uncompetitively low prices and irrational behaviour is offensive and absurd," he said.
The airline copped a protest vote against its remuneration report after the shareholders' association and an influential adviser to institutional investors advised them to vote against it. The no-vote amounted to 5 per cent.
Virgin has not given any earnings guidance but said it would achieve its target of boosting capacity in the domestic market by between 3 and 4 per cent in the first half.
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