Qatar Airways has announced its intention to buy a 25% stake in Virgin Australia as the Middle East airline takes a new approach to strengthening its presence in the Australian market.
The Qatari flag carrier is hoping to acquire a stake in the country’s second biggest airline from Bain Capital, subject to regulatory approval, to “drive increased competition” in Australia’s aviation market in the face of Qantas’ dominating presence.
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Qatar Airways CEO Badr Mohammed Al-Meer said he believed better competition in the market would “help raise the bar” of service for customers, he said: “The alignment of our two airlines is significant, the relationships are deep, and we could not be more proud to bring even more great value and choice to all Australians.
“The investment further demonstrates our strategic alignment with Virgin Australia and our collective ambition to deliver the best possible service.”
The proposed deal comes after years of tension between Qatar Airways and Qantas, with the latter airline’s dominance often blamed for the Australian government’s refusal to grant permission for more Qatari routes to the country last year.
In its announcement about the deal, Virgin Australia said the new funding would allow it to wet lease aircraft for new long-haul routes from Melbourne, Brisbane, Perth and Sydney to Doha, benefiting Qatar Airways by increasing traffic to its home hub airport.
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By GlobalDataThe new routes, set to begin in mid-2025 subject to approval, would also open up “more than 100” new flight connection opportunities according to Virgin through an expanded codeshare agreement with Qatar.
Virgin Australia Group CEO Jayne Hrdlicka said: “I am delighted that our closer relationship allows us to put our ‘toe in the water’ regarding long-haul international, as well as the ability to deepen other areas of existing cooperation, including between our respective loyalty programs and code sharing arrangements.”
The proposal comes at a time of upheaval for the Australian aviation sector as Qantas attempts to recover its reputation after a series of legal and customer service scandals that led to the early exit of former CEO Alan Joyce.
Virgin Australia has also been working towards an IPO since early 2023 as part of its turnaround after being saved from voluntary administration by Bain Capital in 2020, with Hrdlicka announcing she would be stepping down as CEO in February 2024 as the airline moved into its “next phase”, though her replacement is still yet to be announced.
Bain Capital Partner Mike Murphy said the work undertaken by the US investment firm had brought Virgin Australia to “an attractive market position” with a “promising growth trajectory” ready to be built on with Qatar as a “cornerstone” investor.
