Air New Zealand, the national carrier three-quarters owned by the government, has lifted its stake in partner Virgin Blue Holdings, taking advantage of the Australian airline's weak share price.
Air NZ paid A$32.8 million, or 29.7 cents per share, to lift its stake 5 percentage points to 19.99 per cent, according to a substantial shareholder notice lodged on the ASX. Chief executive Rob Fyfe said Virgin's plunging share price made the acquisition attractive.
Since buying the initial Virgin stake in January, Air NZ has made a paper loss of A$42.8 million. Virgin's shares rose 3.3 per cent to 31 Australian cents yesterday. Fyfe said the airline has no intention of making a takeover bid.
"The recent weakness in Virgin Australia's share price provided us with an opportunity to gain further exposure to Virgin Australia at an attractive price," Fyfe said. "This increased investment demonstrates our continued belief in the strategy that Virgin Australia is pursuing and our confidence in the Virgin Australia management team to deliver this strategy."
Air NZ's increased stake comes at a significant discount to the A$145 million, or 44 Australian cents per share, it laid out for its initial 15 per cent investment. Brisbane-based Virgin has had to contend with rising fuel costs and the Christchurch earthquake and Yasi cyclone, which led to an annual loss of A$66.6 million.
