Qatar Airways Target Virgin Australia After Buying 25% Stake in Airlink

DOHA- The best airline in the World, Qatar Airways (QR) is close to finalizing a deal to acquire a minority stake (possibly 20%) in Virgin Australia (VA), almost 1.5 years after its private equity owner Bain Capital delayed a billion-dollar float of the carrier and pivoted to courting strategic buyers.

This report coincides with the news that Qatar Airways has acquired a 25% stake in South African regional carrier Airlink (4Z), solidifying its investment plans in southern Africa.

Qatar Airways Virgin Australia Deal

According to Street Talk, Qatar Airways is within days of signing the deal, although it would be conditional on receiving approval from the Foreign Investment Review Board (FIRB). The talks were first revealed by The AFR in June.

While the Labor government has had some past issues with Qatar, such as knocking back the state-owned airline’s requests for more flights into the country, it would presumably have some second thoughts about blocking this deal unless FIRB had solid grounds to recommend against it.

It’s worth noting that Bonza and Regional Express (REX) have both collapsed in recent months, leaving few competitors for local giant Qantas (QF). Knocking back Qatar’s acquisition could lead to criticism for protecting Qantas’ profits, especially with an election near.

Should the two parties sign a deal as expected, it could dramatically shake up Australia’s aviation landscape and potentially threaten Qantas’ stranglehold on domestic routes.

Challenging Qantas Status Quo

Qantas and its budget carrier Jetstar (JQ) had a 61.8% market share of domestic passengers at the end of March, ahead of Virgin’s 31.3%. This market share could expand with Qatar as a strategic backer for Virgin.

For international travel, Qatar would be acquiring the Virgin stake at a time when fellow overseas carriers like Emirates and Singapore Airlines are continuing to add capacity for flights as demand bounces back from the COVID-19 lull.

Bain Capital, which bought Virgin out of administration in 2020 at the start of the pandemic, is expected to see a payday from the Qatar deal while still maintaining majority ownership of the carrier.

The US private capital firm, led locally by Michael Murphy, had previously explored a public listing for Virgin, with a non-deal roadshow conducted early last year, but did not proceed with the mooted float.

Furthermore, the Senior managers, including CEO Jayne Hrdlicka and chief development officer David Marr, who presented at the IPO meetings, have since exited or are exiting the business.

Virgin recorded $2.8 billion in revenue in the six months to December 31, up from $2.5 billion in the same period the previous year. Subsequently, it reported a $129 million profit in the 2023 financial year.

Investments in Other Airlines

According to research by Aviation A2Z analysts, Oneworld Alliance Member Carrier is known for its strategic investments in airlines or its parent companies.

Qatar Airways has invested in the IAG group parent of British Airways (BA) and airlines such as RwandAir (WB), LATAM Airlines Group, Cathay Pacific (CX), China Southern Airlines (CZ), Air Italy (IG) also in jop-on jet service provider JSX along with JetBlue (B6).

Here’s the summary of investments made by Qatar Airways in various airlines and groups of airlines:

1. Airlink- 25% stake acquired in 2024
2. IAG Group- 25.1 percent stake acquired in 2020 (first investment in 2015 of 9.99%)
3. Rwandair- 49% stake in 2020
4. Cathay Pacific- 9.61% stake in 2020 (some also referring to 9.99 but officially its 9.61)
5. Air Italy parent AQA holdings- 49% Stake in 2019
6. China Southern Airlines- 5% stake in 2019
7. JetSuite X (JSX)- Minority stake in 2018

At last, to conclude, Qatar Airways Group is the 10th largest airline group in terms of passengers flown in 2022 and it is progressing steadily to overtake Turkish Airlines (TK).

What are your thoughts on Qatar Airways’ investments in other airlines? Let us know in the comments.

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