Qatar Airways is set to invest in a 25% stake in Virgin Australia (ASX:VAH), marking the latest instalment in the Australian carrier’s turbulent post-pandemic recovery and growth strategy.
Subject to foreign investment decision
The proposed acquisition, the financial details of which remain undisclosed, is subject to approval from both the Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC).
Virgin Australia (ASX:VAH), which went into administration in 2020 during the pandemic, sees this deal as a potential stepping stone towards a future initial public offering (IPO).
It’s also a market expansion opportunity for Qatar Airways, which the Albanese government previously blocked from flying an additional 21 services into Sydney, Melbourne, Brisbane and Perth per week.
International reach
The deal, agreed upon with Virgin Australia’s owner, Bain Capital, will enable the Australian carrier to expand its international reach, with plans to launch flights from key Australian cities – Brisbane, Melbourne, Perth, and Sydney – to Doha.
If successful, Virgin Australia will enter the long-haul international market by mid-2025, under a wet lease agreement with Qatar Airways.
Virgin Australia’s chief executive, Jayne Hrdlicka, said the partnership would allow the airline to compete more effectively in the domestic market while significantly expanding its international offerings.
Access to resources
She said the collaboration with Qatar Airways would give Virgin access to resources and expertise otherwise unattainable, boosting its competitiveness.
Treasurer Jim Chalmers, who is responsible for reviewing the deal under FIRB guidelines, said it would not be appropriate to comment on the decision-making process but did reiterate the government’s aspirations for a competitive airline industry that benefits consumers.
This acquisition could play a key role in boosting the Australian economy, with Virgin projecting an estimated A$3 billion in additional economic contributions over five years.