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Virgin Australia strikes airline deal with China's HNA Aviation
By business reporter Michael Janda
Updated Tue at 11:12am
Virgin Australia has struck a deal with HNA Aviation where the Chinese company will take a 13 per cent stake in the Australian airline.
HNA's main brand is Hainan Airlines, although it operates a range of budget carriers across China and already has investments in some non-Chinese carriers.
The Chinese company is investing $159 million in Virgin Australia, buying its stake at 30 cents per share, a 7.1 per cent premium to the last trading price of 28 cents a share.
The stock will be freshly issued, diluting existing shareholders and boosting Virgin Australia's capital.
Virgin said HNA is committed to raising that stake to 19.99 per cent and it is supportive of the Australian airline's capital structure review.
One of Virgin Australia's current major shareholders, Air New Zealand, has already indicated its intention to sell down, or exit completely, its stake in Virgin.
Virgin Australia's current major shareholders are Air New Zealand (nearly 26 per cent), Etihad (24.2 per cent), Singapore Airlines (22.75 per cent) and Virgin Group (just under 10 per cent).
Virgin to fly directly to China; Beijing, Hong Kong possible routes
The deal is also intended to facilitate direct Virgin Australia flights to China, but the airline's chief executive John Borghetti declined to reveal which cities it is planning to fly to.
"There is a lot of attraction to operating into Beijing, for example, there is also a lot of attraction in operating to Hong Kong, but that's still being worked through," he told reporters in a telephone briefing.
"There are also some secondary cities we're looking at ... wherever the operations are to it will be a significant schedule, it won't be just one or two flights a week."
Mr Borghetti was also coy on how many of the flights would actually be operated by Virgin Australia using its own planes.
"Whether it's all Virgin Australia aircraft or not, let's see how that works out, but it'll be a joint operation and that's what's important."
By business reporter Michael Janda
Updated Tue at 11:12am
Virgin Australia has struck a deal with HNA Aviation where the Chinese company will take a 13 per cent stake in the Australian airline.
HNA's main brand is Hainan Airlines, although it operates a range of budget carriers across China and already has investments in some non-Chinese carriers.
The Chinese company is investing $159 million in Virgin Australia, buying its stake at 30 cents per share, a 7.1 per cent premium to the last trading price of 28 cents a share.
The stock will be freshly issued, diluting existing shareholders and boosting Virgin Australia's capital.
Virgin said HNA is committed to raising that stake to 19.99 per cent and it is supportive of the Australian airline's capital structure review.
One of Virgin Australia's current major shareholders, Air New Zealand, has already indicated its intention to sell down, or exit completely, its stake in Virgin.
Virgin Australia's current major shareholders are Air New Zealand (nearly 26 per cent), Etihad (24.2 per cent), Singapore Airlines (22.75 per cent) and Virgin Group (just under 10 per cent).
Virgin to fly directly to China; Beijing, Hong Kong possible routes
The deal is also intended to facilitate direct Virgin Australia flights to China, but the airline's chief executive John Borghetti declined to reveal which cities it is planning to fly to.
"There is a lot of attraction to operating into Beijing, for example, there is also a lot of attraction in operating to Hong Kong, but that's still being worked through," he told reporters in a telephone briefing.
"There are also some secondary cities we're looking at ... wherever the operations are to it will be a significant schedule, it won't be just one or two flights a week."
Mr Borghetti was also coy on how many of the flights would actually be operated by Virgin Australia using its own planes.
"Whether it's all Virgin Australia aircraft or not, let's see how that works out, but it'll be a joint operation and that's what's important."