Virgin Australia to be split into two separate holding companies
Virgin Australia has just announced a proposal which would see its international airline held by a separate unlisted company – allowing it to comply with the 49% Australian ownership restriction while enabling further investment from foreigners in its domestic operations.
There would be no change from an operational perspective for staff and consumers, with both the domestic and international businesses to continue to operate as an integrated airline under one brand.
The carrier said the proposed structure would change the shareholding and governance structure of the international airlines to ensure compliance with the Air Navigation Act, which limits foreign ownership of Austalian international carriers to 49%.
A new company called Virgin Australia International Holdings Pty Ltd would hold the international operations, owned by existing Virgin Australia shareholders and with a majority independent board of directors. It would be “comprehensively serviced and funded” by Virgin Australia.
Virgin said that over the last 12 months its foreign ownership had been sitting only marginally below 49%, and that it had therefore been evaluating options to ensure ongoing compliance.
“The VAH board of directors and management believe that the proposed new structure is the best option for Virgin Australia and its stakeholders to ensure long-term growth and access to capital for its business,” the company said.
Currently major foreign shareholders in the company include Air New Zealand and Richard Branson’s Virgin Group, and Etihad ceo James Hogan has repeatedly hinted that EY would like to have an equity stake in its Virgin Australia alliance partner.
It’s proposed that the new arrangement would be finalised by the end of March 2012.
MEANWHILE Virgin has also just announced its financial results for the six months to 31 Dec, with strong revenue growth of 18.4% to just over $2 billion.
The company has declared a $51.8 million profit after tax – more than double the result for the previous corresponding period – while its “underlying profit” was $96.1m, up 34.4%.
Virgin Australia said it was seeing some “early upside” from its revamped products and services as well as its international alliances, with network yield up 11.5% and it had also seen domestic yield grow by 13.7%.
The carrier said it had seen significant growth in corporate market account activity, with corporate and government accounts now close to 17% of total revenue and the addition of 35 new corporate accounts.
Virgin also revealed plans to introduce a new in-flight entertainment system using Wi-Fi technology and Samsung Galaxy Tabs, as well as expanding its domestic business class offering to its Embraer E190 fleet.
More information in today’s Travel Daily.
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