Virgin Australia confirms stake sale to HNA Group
Under the commercial alliance, the two airlines will introduce direct flights between Australia and China and co-operate on commercial functions including code-sharing, frequent flyer programs, lounge access and promotion of tourism and business travel.
Chief Executive Officer of the Virgin Australia Group John Borghetti says: “The Chinese travel market represents Australia’s fastest growing and most valuable inbound travel market, with inbound passengers from China increasing by approximately 18 per cent per year since 2010. In 2015, over one million Chinese travellers visited Australia, spending approximately A$8.3 billion in total on their journeys. By 2020, almost 1.5 million Chinese travellers are projected to visit Australia in a market expected to be worth up to A$13 billion.
“We are pleased to welcome HNA as a new shareholder and strategic alliance partner. The alliance will see us leverage the opportunities offered by China as well as the synergies of HNA’s comprehensive aviation supply chain,” Borghetti said.
The Chief Executive Officer of HNA says: “HNA is committed to expanding in the airline industry through strategic investments in companies with strong market positions and excellent management teams. We are excited to support the Virgin Australia Group through our investment and the strategic alliance. We look forward to working together to create a seamless travel experience between Australia and to China and to deliver further choice, value and excellence to travellers worldwide.”
The share placement is subject to and will take place after receipt by HNA of regulatory approvals from Chinese authorities. HNA will be invited to nominate a director to the Virgin Australia Group board.
The strategic alliance will be subject to ACCC authorisation, regulatory approvals from Chinese authorities and other commercial conditions precedent.
Virgin Australia’s current major shareholders are Air New Zealand (at approximately 26%), Etihad (24.2%), Singapore Airlines (22.75%) and Virgin Group (under 10%).