Qatar Airways chases 25 per cent of Virgin Australia for various Aus to Doha routes

One of the major global airlines is making a splash in the beleaguered Australian market, in what would be a major expansion for the Aussie airline.

Virgin Australia could soon be part-owned by Qatar Airways, adding a major Australia-to-the-Middle East route to the roster by mid-2025.

Qatar Airways intends to take a 25 per cent stake in Virgin Australia, which will be subject to approval from the Foreign Investment Review Board.

The deal would allow flights from Australia’s four largest cities to Doha, under a plane and crew lease agreement.

In a statement, Virgin says the proposed minority ownership stake would create “more choice and better value for Australians”.

Virgin Australia has not flown flights longer than eight hours since it was rescued from administration by Bain Capital in 2020. Picture: NewsWire / Damian Shaw

“Domestic competition in Australia is dependent on Virgin Australia thriving through the inevitable ups and downs of aviation,” the parties involved say.

Federal Treasurer Jim Chalmers said he would wait for the FIRB to “do their diligent work” and provide advice.

“We do want the airline sector to be stronger and more competitive,” Mr Chalmers told reporters on Tuesday.

“We know across the economy, not just in the airline sector, that foreign investment can be in our national interest.

“My job, and the Foreign Investment Review Board’s job, is to determine the national interest and make decisions consistent with it.”

Opposition Leader Peter Dutton has welcomed the announcement.

“We welcome competition and Virgin is stronger as a result of this investment,” Mr Dutton told Sky News.

“It’s good for consumers in our country if there’s competition, which is obviously not the case necessarily at the moment.

“So, let’s see what comes out of the FIRB process, but on the face of it, we welcome the announcement.”

Qatar Airways has been trying to expand its routes into Australia, but was blocked by Transport Minister Catherine King last year.

Qatar Airways and Virgin Australia have been aligned since 2022. Picture: Supplied

The new deal would be done by way of the Gulf airline acquiring 25 per cent of the stake of Virgin owner, Bain Capital.

“This partnership brings the missing piece to Virgin Australia’s longer-term strategy and is a huge vote of confidence in Australian aviation,” Virgin Australia chief executive Jayne Hrdlicka said.

The two airlines have “codeshared” flights since 2022.

The proposed deal would allow Virgin to resume eight-hour-plus flights again, and has positive implications for the development sustainable aviation fuel, given Virgin Australia’s commitment to Australian jet fuel decarbonisation efforts, the statement reads.

“We believe competition in aviation is a good thing and it helps raise the bar, ultimately benefiting customers,” Qatar Airways chief executive Badr Mohammed Al-Meer said.

“This agreement will also help support Australian jobs, businesses and the wider economy.”

The Virgin Australia boss says government Foreign Investment Review Board approval was not being taken for granted, but the deal-makers had filed submissions outlining the benefits for Australian aviation, Australian travellers and the economy.

Qatar Prime Minister and Minister of Foreign Affairs, Mohammed bin Abdulrahman bin Jassim Al Thani, met Foreign Affairs Minister Penny Wong in Canberra in August. Picture: NewsWire / Martin Ollman

The parties involved claim the deal would add $3bn to the Australian economy through incremental visitor flows during the next five years.

Virgin Group and the Queensland Investment Corporation will retain shareholdings in Virgin Australia.

“Importantly, it will further strengthen Virgin Australia’s ability to compete over the long term, which will inevitably translate into more choice and even better value airfares for consumers as well as additional Australian aviation jobs,” Ms Hrdlicka said.

Virgin Australia went into voluntary administration in April 2020, almost immediately once the Covid-19 pandemic took hold.

The airline was saved by US-based Bain Capital, the private investment firm started by Mitt Romney.

The Qatar deal revitalises the prospect of Virgin Australia returning to the ASX. Picture: NewsWire / Gaye Gerard

When it went bust, Singapore Airlines and Etihad had stakes in Virgin Australia.

Speaking on Channel 9’s Today on Monday morning, Ms Hrdlicka said this Qatar deal was different because it would be one large, strategic cornerstone stake.

“We had four investors who were all competitors and it didn’t play out that well because we didn’t have one party who was really deeply connected to helping us be successful in our Australian market,” the chief executive said.

When administrators were called in the company stopped trading on the ASX. A long-delayed return to the local bourse has been touted for years.

Ms Hrdlicka said the Qatar Airways ownership would set them on a path to relisting.

“And it’s the first step in a migration that will ultimately see Virgin Australia back in the public markets, held, we assume, largely by Australian institutions and retail investors.”