Abu Dhabi's fast-growing Etihad Airways has snapped up nearly four per cent of Virgin Australia as it pushes ahead with its strategy of buying minority stakes in foreign airlines.
The firm's acquisition of 3.96 per cent of the
airline for more than $35 million is its fourth such deal involving an overseas carrier since December.
Etihad said in a statement that the deal builds on a 10-year strategic partnership agreed between the two airlines back in 2010 and will have "commercial benefits" for both sides.
Etihad CEO James Hogan yesterday said the UAE airline may acquire as much as 10 per cent of Virgin Australia in due course. The latest deal follows the recent acquisition of stakes in Air Seychelles, Air Berlin and Irish carrier Aer Lingus, and Hogan said it was all part of a drive to achieve greater scale as the Abu Dhabi-based airline competes with Emirates Airline and Qatar Airways.
"We do have two large competitors on our doorstep. And we will never match their aircraft order book," he said.
However, one aviation analyst told 7DAYS yesterday it was unclear what immediate benefits the airline's latest deal would provide. John Strickland, an industry expert who advises airlines through his firm JLS Consulting, said the Australian aviation market is "very competitive".
"Most of the traffic, although there is significant volume, is leisure driven, which means it is price sensitive. And in this climate, with high fuel prices, that means profitability can be very difficult to achieve... it's not the most lucrative market in the world by a long stretch," he explained.
Strickland said Etihad's growing portfolio of investments increases the list of items competing for the time of the airline's management, and that these other airlines will have their own problems.
"They have invested in a number of airlines now and I just think they have got to be careful to keep a focus on what they are doing," he said.
Meanwhile, Tim Clark, president of Dubai's Emirates Airline, has rejected reports that it was set for a similar Antipodean adventure by acquiring a stake in Qantas Airways.
"Tim Clark's denial makes sense to me," Strickland told 7DAYS. "Emirates is already massive in the Australian market and I can't really see what they would gain. Emirates is part of Qantas' problems, they are one of its biggest competitors."
© 7Days 2012
