Qatar Airways is said to be in discussions to purchase up to a 20% stake in Virgin Australia. According to information given to Bloomberg News by a source who wished to remain anonymous, the negotiations between Qatar Airways and Bain Capital, the owner of Virgin Australia, may take time to conclude or may be interrupted.
The acquisition of the stake in Australia's second largest airline could be revealed in early July 2024, according to anonymous sources within the airline cited by the report. Previously, the sale of an equity stake in Virgin Australia to Singapore Airlines was considered but later dismissed.
Bain last year postponed Virgin Australia's initial public offering plans and announced earlier this year that Jayne Hrdlicka would step down as chief executive after finding a replacement.
The share acquisition would likely enhance the collaboration between Qatar Airways and Virgin Australia, which already have a partnership in place, done in September 2022, that enables passenger flow between their networks and connectivity between around 30 Australian destinations and Qatar Airways' global network.
Doha-based Qatar Airways is the largest shareholder of British Airways owner IAG SA, and owns around 10 per cent of Hong Kong-based Cathay Pacific Airways Ltd. and Latam Airlines Group SA.
This partnership is similar to the one between Emirates and Qantas, which facilitates traffic between Australia and worldwide destinations. But any potential deal would have to be cleared by Australia’s competition watchdog, the Foreign Investment Review Board.
Regional rival Turkish Airlines launched its first flight to Australia this year via Singapore, while Emirates has also increased its operations to the continent, highlighting demand for long-haul services from the Middle East.
The middle eastern carrier is trying to get a piece of Australian market for long, but the federal government has previously rejected Qatar Airways’ plans to secure additional flying rights to Australia, with the Transport Minister saying it was due to security concerns last year.
A 2020 Doha Airport incident, which saw five Australian women taken off a Qatar Airways flight in Doha and stripped search, created an uproar, also influenced the rejection.
In 2020, private equity firm Bain Capital acquired Virgin Australia for A$3.5 billion (US$2.45 billion) as the carrier struggled with the effects of the COVID pandemic.
Since then, Virgin Australia has undergone a restructuring process that involved significant staff layoffs and fleet reduction. As of June 2024, the airline operates a fleet of 87 Boeing 737 aircraft, including – 700, – 800, and MAX versions.
Bain Capital is reportedly planning an IPO for Virgin Australia sometime in 2024; however, this decision has been repeatedly postponed. Any deal involving a substantial equity stake in Virgin Australia would require approval from Australia's Foreign Investment Review Board.
The Australian government will have the final say on any such deal; it has had a somewhat troubled relationship with Qatar Airways due to its restrictive market access policy.
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