Qatar Airways looks to take a 20% stake in Virgin Australia

Qatar Airways has revealed plans to take up a 20 per cent of Virgin Australia (VA) in a move that could massively shake up the Australian aviation landscape.

The Qatari Government-owned carrier is in negotiations with VA as both airlines look to take on the Qantas Group.

Sources close to Virgin advisors also revealed considerations around selling a stake to Singapore Airlines, The Financial Review reported. Reports also suggest that the deal could be announced as early as next week.

The news is at odds with VA’s plans for an Initial Public Offering (IPO). Bain Capital, the Boston-based equity firm that owns Virgin Australia is understood to have again put the IPO on the backburner.

Bain bought the Australian carrier in 2020 for $700m in equity, taking on its $5.15b debt with plans to list with around $1.97b in borrowings and a $3b valuation.

Weak market conditions have been a major factor in the ongoing delay for the IPO.

Qatar Airways and the Australian Government

Tensions between the Qatari airline and the Australian Government have been discussed at length in the last 12 months after a number of incidents in recent years.

In October 2020, several Australian women were subject to ‘offensive, grossly inappropriate’ strip searches at Qatar’s Hamad International Airport in relation to the discovery of an abandoned new-born baby in a terminal.

Also, Qatar Airways bid to launch 28 new flights into Australia last year was blocked by the Australian Government due to ‘national interest’ in July last year, a decision that has been highly criticised.

Government blocks Qatar Airways’ application for additional flights following opposition from Qantas

Later in 2023, the same office, that of Transport Minister Catherine King granted 35 new weekly flights to Turkish Airlines. Turkish Airlines is not currently using its full capacity as it waits for new long-range aircraft that will enable it to fly direct between Istanbul and Australia.

The financial back story

Following the pandemic, Virgin Australia asked the Morrison Government for a $1.4 billion bailout loan, but it repeatedly said it would prefer a market-led solution and hired ex-Macquarie CEO Nicholas Moore to monitor the situation.

Bain Capital became the new owner of Virgin Australia after creditors approved a $3.5 billion deal in 2020.

New contender, Qatar Airways is owned by the Qatari government. The country’s sovereign wealth fund, the Qatar Investment Authority (QIA), acquired the stakes previously held by private investors and a former prime minister in July 2013. Since then, the company has been fully controlled by the government.

In the UK, they’ve bought big chunks of everything from Sainsbury’s supermarket chain to London’s Canary Wharf Group and Harrods. and in Berlin, the Sony Center.

Moving across the pond to America, QIA holds stakes in companies like Uber Technologies Inc., the Empire State Realty Trust and Manhattan Plaza in New York.

In France, they’re part owners of luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton SE, Paris department store Printemps and energy giant Total SA.

In sport, they have owned European football teams Paris Saint-Germain and by Qatar Airways sponsor FC Barcelona and the Sydney Swans AFL team.

In media, Al Jazeera, the international news network is also funded by the Qatari government. The Al Jazeera Media Network also acquired Miramax Films.

QIA has substantial holdings in financial institutions such as Credit Suisse and Barclays.

In technology, the Qatar Investment Authority has a stake in Uber Technologies Inc.

Any stake in Virgin Australia would appear to be small change.

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

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