China’s Aussie wings
Middle Kingdom set for 40pc Virgin stake.
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VIRGIN Australia is in line to become 40 per cent Chinese owned after a second company from China bought a major stake in the airline.
Chinese manufacturing and construction company Nanshan Group yesterday confirmed it was finalising a $300 million deal to buy 20 per cent of the airline from Air New Zealand.
The outlook for Virgin’s shareholder register has been the subject of fierce speculation since March, when Air New Zealand said it planned to sell its 26 per cent stake.
Nanshan, a privately owned group, is also a part owner of Chinese domestic carrier Quingdao Airlines, a large airport and an executive jet business.
The investment, which requires regulatory approval from the Chinese Government, follows a deal 10 days ago by Chinese airline operator HNA Group to buy an initial 13 per cent stake in Virgin.
That deal, on May 31, involves the issue of new shares by Virgin to HNA, which dilutes existing shareholdings. It also allows HNA to increase its stake to 20 per cent.
Nanshan and HNA will join Etihad Airways — which has a 21.8 per cent stake — Singapore Airlines, on 20 per cent, and Sir Richard Branson’s UK-based Virgin Group, at 8.7 per cent, as major shareholders in Virgin. After the new share issue and sale to Nanshan, Air New Zealand is still expected to be left with about 2.5 per cent of Virgin.
“We believe Nanshan Group will be a very strong, positive and complementary shareholder for Virgin Australia,” Air New Zealand chairman Tony Carter said.
“The sale will allow Air New Zealand to focus on its own growth opportunities.”
Nanshan will pay Air New Zealand 33c for each Virgin share — a premium on the 28c share price before the announcement yesterday. It is also a premium on the 30c HNA agreed to pay.
Aviation analyst Neil Hansford, chairman of Strategic Aviation Solutions, said the deal was good for the Australian airline industry.
“It gives both Nansham and HNA the ability to expand their airlines in to Australia and it means Virgin and its subsidiary Tiger will be able to pick up all that extra business,” Mr Hansford said.
“But it will be interesting to see the mechanics of the Virgin boardroom now ... that’s four very different business backgrounds and cultures.
“Virgin boss John Borghetti will have his hands full. It will be a bit like having three or four ex wives all at the same dinner party.”
karina.barrymore@news.com.au
Originally published as China’s Aussie wings
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