Qatar Airways Group will acquire a 25% stake in Virgin Australia (VA, Brisbane International), building on an existing non-equity strategic partnership and ending months of speculation about a possible deal between the two carriers. Virgin Australia will also make a return to long-haul international flying, wet-leasing Qatari aircraft in a neat agreement that allows Qatar Airways to sidestep existing access restrictions to Australia's primary airports.
"The minority stake also serves as a cornerstone investment ahead of the anticipated return of Virgin Australia into public ownership," an October 1, 2024, statement reads. The value of the transaction was not disclosed. However, it will see Bain Capital reduce its controlling stake in Virgin Australia to less than 70%. The 5% shareholding held by Virgin Group and 2.5% parcel held by the Queensland Investment Corporation will not change.
"We are pleased to welcome Qatar Airways Group as a partner at this stage," said Bain Capital partner Mike Murphy.
Qatar Airways (QR, Doha Hamad International) has a significant presence in the Australian market with flights to Sydney Kingsford Smith, Melbourne Tullamarine, Brisbane International, Perth International, and Adelaide International. The existing bilateral air services agreement limits the carrier's flights to the first four airports to a cumulative 28 per week. The Australian government denied a bid by Qatar Airways to lift that cap last year. The reasons for the rejection have never been made clear. However, the government was subject to lobbying by Qatar's Oneworld partner Qantas (QF, Sydney Kingsford Smith), which was against the proposal. Now Virgin Australia plans to wet-lease aircraft from Qatar Airways and begin its own flights to Doha, effectively getting around the government's heavily criticised decision.
"Subject to Australian Competition and Consumer Commission (ACCC) permission, this cooperation will enable Virgin Australia to launch flights from Brisbane, Melbourne, Perth, and Sydney to Doha," the statement reads. "The proposed wet lease services will begin in mid-2025, allowing Virgin Australia to assess the longer-term merits and viability of widebody aircraft flying while providing Australians with greater local competition for their long-haul travel needs in the near term."
Virgin Australia Group CEO Jayne Hrdlicka said the deal is the "missing piece" in the airline's longer-term strategy and a vote of confidence in Australian aviation. "Qatar Airways has been a valued codeshare partner of Virgin Australia since 2022," she said. "This investment will deepen an already strong partnership by bringing critical scale and the best industry expertise to support our long-term competitiveness and growth."
At an early September aviation conference in Brisbane, Hrdlicka dismissed reports of Qatar Airways' interest as rumour and innuendo. "There’s been a lot of creative fiction written,” she said of the purported deal.
Qatar Airways Group has snapped up stakes in several airlines recently, including a 25% minority share in Airlink (South Africa) (4Z, Johannesburg O.R. Tambo) and is finalising a 49% shareholding in RwandAir (WB, Kigali). It also has stakes in Cathay Pacific (CX, Hong Kong International) and LATAM Airlines Group.
"The alignment of our two airlines is significant [and] the relationships are deep," said Qatar Airways Group CEO Badr Mohammed Al-Meer. "We believe competition in aviation is a good thing and it helps raise the bar, ultimately benefitting consumers."
The acquisition remains subject to approval by Australia's Foreign Investment Review Board, and Virgin Australia's plans to start services to Doha will need approval from the ACCC.