Virgin Australia plans to buy the remaining 40% of shares in Tiger Australia from Tiger Airways Holdings for A$1 and fly the airline on a number of short-haul international routes.
Virgin already owns 60% stake in the airline, and once the latest transaction is completed, it will secure 100% of the loss-making low cost carrier, Tiger Australia concluding the joint venture which commenced in mid last year.
As part of the acquisition, Virgin Australia will be bestowed brand rights to fly Tiger Australia to short-haul international destinations providing new growth opportunities in line with the group’s ‘Virgin Vision’ strategy to 2017, according to the airline.
“Given the ongoing subdued consumer demand in the Australian domestic market, the growth of the Tigerair Australia domestic fleet is likely to be reduced. Under this proposed transaction, we will benefit from the economies and achieve profitability ahead of schedule by the end of 2016 by leveraging the resources of the Virgin Australia Group,” Virgin CEO, John Borghetti said.
Borghetti said Virgin remains committed to maintaining the airline’s low cost business model and the separate Tigerair brand, “ensuring that we can continue to deliver the most competitive pricing in Australian budget travel”.
Virgin said the partnership will continue in future through brand licencing and certain services will continue to be provided by Singaporean-based Tiger Holdings to Tiger Australia. Virgin said it will consolidate Tiger Australia’s financial results moving forward should the transaction proceed.
The transaction, subject to Federal Investment Review Board approval, is expected to be completed by the end of the year.
