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Air NZ reviews its 26pc stake in Virgin Australia

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by March 30, 2016 General
Auckland-based Air New Zealand has hired First NZ Capital and Credit Suisse to advise on options for its stake. Photo / Getty Images
Auckland-based Air New Zealand has hired First NZ Capital and Credit Suisse to advise on options for its stake. Photo / Getty Images

Air New Zealand has hired investment bankers to look at a sale of its 26 per cent stake in Virgin Australia, less than a fortnight after committing to a one-year A$131.2 million loan to the airline.

Virgin’s ASX-listed shares were halted pending the announcement, recently trading at 38 Australian cents.

READ MORE:
Air NZ to lend Virgin shareholders A$425m
Virgin Australia unlikely to make significant capital

Auckland-based Air New Zealand has hired First NZ Capital and Credit Suisse to advise on options for its stake, including a potential sale of all or part of its Virgin shareholding.

Chairman Tony Carter said Air New Zealand doesn’t want a large minority equity stake in Virgin as it focuses on its own plans. Chief executive Chris Luxon resigned from Virgin’s board effective immediately.

Earlier this month Virgin’s cornerstone shareholders – Air NZ, Etihad Airways, Singapore Airlines and Virgin Group – committed to providing A$425 million of one-year funding to allow the airline to review its mix of debt and equity and consider operational initiatives to boost Virgin’s cashflow and profitability.

Virgin took out a US$125 million loan in the first half of its financial year following a decline in its free cash flow to A$544 million from A$839 million a year earlier.

Air NZ shares rose 1.2 percent to $2.885.

- BusinessDesk

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