Air NZ pays A$145m for 14.9% of Virgin Blue

Friday 21st January 2011

Air New Zealand paid A$145 million (NZ$188.9m) for a 14.9% stake in Australian-based airline Virgin Blue.

After yesterday saying it had become a "substantial" shareholder in Virgin Blue, Air New Zealand today said further shares were acquired off-market last night which increased Air New Zealand's relevant interest to 14.9%.

The purchase of the shareholding was completed from existing cash resources.

Air New Zealand chief financial officer Rob McDonald said the cost of entry into Virgin Blue was A$145m or 44 cents per share.

Air New Zealand chief executive Rob Fyfe today repeated that the company had no intention to go over 14.99%.

"This is simply an investment in Virgin Blue that reinforces Air New Zealand's strategy to grow its business in Australasia which is continually evolving as a single aviation market," Fyfe said.

"The Tasman alliance with Virgin Blue was a key step in this strategy. This investment cements the important relationship between our two airlines and demonstrates the confidence we have in Virgin Blue and its management to grow their business both within the Tasman alliance and beyond the scope of the alliance."

While the investment provided Air New Zealand with opportunities in the growing Australian domestic market, the company had no intention of entering the Australian domestic market in its own right, Fyfe said.

Air New Zealand would not be seeking representation on the Virgin Blue board for at least six months.

Last year Air New Zealand and Virgin Blue won approval from Transport Minister Steven Joyce to co-operate on routes across the Tasman Sea. The decision followed approval from Australia's antitrust regulator, which reversed its preliminary view, after the two airlines gave guarantees on growth in capacity.

Air New Zealand is majority owned by the New Zealand government.

NZPA

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