InDaily

Adelaide's independent news

Support

Virgin may resume 'robust' Qantas rivalry

Business

Virgin Australia could reignite its price war with rival airline Qantas following its $852 million capital raising.

Comments
Comments Print article

Australia’s number-two carrier last week announced a fully underwritten equity raising, which Bell Potter analyst John O’Shea says could give the company the means to compete for customers with its bigger rival.

“The capital raising provides some short-term funding,” O’Shea said.

“We expect this to translate into a resumption of robust competition between QAN (Qantas) and VAH (Virgin Australia), which decreases the likelihood of any material increases in domestic airfares any time soon.”

O’Shea noted that Virgin Australia, which is shedding jobs and planes in an effort to cut $300 million of annual costs, still faces medium to long-term challenges.

He said soft demand for leisure travel and competition in the corporate market was already keeping downward pressure on economy fares.

China’s Nanshan Group completed its purchase of a 19.98 per cent stake in Virgin Australia from Air New Zealand.

Nanshan paid 0.33 cents a share, putting the purchase price at about $233 million, and leaving Air NZ with a 5.9 per cent stake in Australia’s second biggest airline.

It joins fellow Chinese group HNA, and Etihad, Singapore Airlines and Sir Richard Branson’s Virgin Group as a major shareholder.

-AAP

 

We value local independent journalism. We hope you do too.

InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to become an InDaily supporter.

Powered by PressPatron

Comments

Show comments Hide comments
Will my comment be published? Read the guidelines.

More Business stories

Loading next article