Air New Zealand has bought at least a USD$47 million stake in Australian budget carrier Virgin Blue and plans to raise its holding to up to 15 percent. Air NZ's swoop on Virgin Blue shares sent them up 10 percent to close at AUD$0.44, valuing the airline at AUD$950 million. Air NZ said it has no plans to make a full takeover offer and has received Australian Foreign Investment Review Board approval for the transaction. The investment in Virgin Blue is part of Air New Zealand's strategy to develop scale and reach in this region. The Tasman alliance with Virgin Blue was the first step in this strategy, Air New Zealand chief executive Rob Fyfe said. Australia's competition watchdog cleared the way in December for Virgin Blue to form an alliance on the trans-Tasman route, reversing an earlier rejection. Virgin Blue CEO John Borghetti welcomed Air New Zealand as a shareholder and said the tie-up with Air New Zealand was a key part of the group's strategy to build an international network, along side its core local business.
"We see this as an endorsement to our game change programme," Borghetti said.Air New Zealand said it had bought a substantial stake, which means it already owns at least 5 percent of Virgin Blue, but it declined to say exactly how much it had snapped up. Under law, an Australian airline cannot be more than 49 percent foreign-owned, which limits how much Air New Zealand can buy without Richard Branson's Virgin Group selling down its 26 percent stake in Virgin Blue.
