Virgin takes Tiger stake, SQ invests in Virgin

Virgin takes Tiger stake, SQ invests in Virgin
By admin


Virgin Australia has acquired 60% of Tiger Australia for $35 million with Singapore Airlines taking a 10% interest in Virgin.

Singapore has paid $105m for 245 million shares in a move Virgin Australia chief executive John Borghetti said will enable the airline to “fast-track its growth plans”.

In a separate transaction, Virgin has acquired 100% of Skywest.

Virgin’s stake in Tiger Australia – a division of Tiger Airways Holdings which is partially owned by Singapore Airlines – will see both carriers invest $62.5m collectively into the business to fund growth. The joint venture has the flexibility to expand Tiger’s fleet from 11 to 35 aircraft by 2018, according to a statement.

Virgin will pay an additional $5 million to Tiger Airways if Tiger Australia achieves certain financial performance targets within five years.

“This transaction enables Virgin Australia to access the budget market and enables Tiger Australia to expedite its growth, providing greater competition to this important market segment,” Borghetti said.

“By partnering with Tiger Airways we can use our expertise to leverage Tiger Australia’s competitive cost base and build a sustainable budget carrier.”

Borghetti added that Virgin was “committed to maintaining Tiger Australia’s business model and brand”.

The deal is subject to regulatory approvals, including clearance from the Australian Competition and Consumer Commission (ACCC).

Turning to the acquisition of 10% of Virgin by Singapore Airlines, Borghetti said: “Singapore Airlines is an important strategic alliance partner of Virgin Australia and we are very pleased to have their support as an investor.

“We believe this investment demonstrates their confidence in our strategy and it enables Virgin Australia to fast-track its growth plans.”

Singapore Airlines chief executive Goh Choon Pong said the investment illustrates “the importance and strength of the partnership between our two airlines”.

Email the Travel Weekly team at traveldesk@travelweekly.com.au

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