Air NZ reviews its 26% stake in Virgin Australia

Wednesday 30th March 2016

Air New Zealand has hired investment bankers to look at a sale of its 26 percent 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.

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)

BusinessDesk.co.nz

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