virgin soars as air nz buys stake

Virgin soars as Air NZ buys stake
January 20, 2011 - 5:09PM

Air New Zealand has bought a substantial stake in budget carrier Virgin Blue and plans to raise that stake to between 10 per cent and 14.99 per cent.

Air NZ said today it had no intention of making a full takeover offer and had received Australian Foreign Investment Review Board approval for the transaction.

Virgin Blue shares jumped 4 cents, or 10 per cent, in late trade to close at 44 cents.
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"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 in a statement released after the market closed.

??This investment cements the emerging relationship between our two airlines and demonstrates the confidence we have in Virgin Blue both as an entity and as a partner for Air New Zealand,?? Mr Fyfe said.

A 15 per cent stake in Virgin Blue is currently worth around $143 milion based on Virgin Blue's last closing price.

Air New Zealand said it had obtained Foreign Investment Review Board approval to buy up to 14.99 per cent of Virgin Blue, a shareholding that it believes will keep the total foreign ownership of Virgin Blue within the statutory limit of 49 per cent.

UK-based Virgin Group is Virgin Blue?s largest shareholder, with a 26 per cent stake.

Air New Zealand last week signed a codeshare agreement with Virgin Atlantic that will allow its passengers to book on many Virgin Atlantic services.

Last year, Air New Zealand and Virgin Blue won approval by the Australian Competition and Consumer Commission and from NZ Transport Minister Steven Joyce to co-operate on routes across the Tasman.