Virgin signs deal with Chinese airline group
HNA to invest $170 million for 13% stake.
Virgin Australia has announced a $A159 million ($170 million) alliance with Chinese company HNA Aviation Group, two months after Air New Zealand revealed plans to exit its stake in the Australian airline.
The deal involves a placement of new shares to HNA at A30c a share, giving it a Virgin stake of 13%.
Air NZ is selling a 26% stake.
Virgin chief executive John Borghetti said China represented Australia’s fastest growing inbound tourism market, up 18% a year since 2010.
By 2020 almost 1.5 million Chinese travellers were expected to visit Australia in trade worth about $A13 billion.
“The alliance will see us leverage the opportunities offered by China as well as the synergies of HNA’s comprehensive aviation supply chain,” he said.
Virgin said HNA was committed to increasing its holding over time to 19.9%.
The deal includes plans to code-share on new direct flights between Australia and China, as well as co-operation on promotion, lounge access and frequent flyer programmes.
The A30c placement price represents a 4.5% premium on the market price of Virgin shares, which were last at A28.7c.
At A30c, Air NZ’s stake would be worth about $A274 million ($294 million).
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Tim Hunter
Tue, 31 May 2016
Tue, 31 May 2016
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Virgin signs deal with Chinese airline group
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