Chinese tycoon takes stake in Virgin Australia
Billionaire Chen Feng’s HNA Group agreed to purchase a stake in Virgin Australia Holdings as the Chinese conglomerate adds to its more than US$91 billion of assets worldwide.
The owner of Hainan Airlines Co. will buy 13 percent of Virgin Australia for A$159 million (US$114 million) and plans to raise that stake to about 20 percent over time, the Australian carrier said. Brisbane-based Virgin Australia already counts Air New Zealand Ltd., Singapore Airlines Ltd. and Etihad Airways PJSC as major shareholders, Bloomberg reported.
Virgin Australia, with net debt of A$2.1 billion, has been reviewing its capital requirements and shares in the airline jumped in Sydney as it announced the fresh funds from HNA. The Chinese group’s toehold in Virgin Australia continues a multi-billion dollar spree that has scooped up everything from airlines to hotels and supermarkets.
In an alliance with HNA, Virgin Australia plans to start direct flights to and from China next year and fly some of those visitors on its network at home. Qantas Airways currently dominates that market. Last year, more than 1 million Chinese travellers visited Australia and by 2020, the number will climb to 1.5 million, Virgin said.
“We carry almost no traffic from China on our domestic network,” chief executive officer John Borghetti said on a call with reporters on Tuesday. “This will change the dynamics. The way that China is growing, direct services in and out of China are very important.”
Last month, Chen’s conglomerate agreed to buy Swiss airline-catering company Gategroup Holding for about US$1.4 billion. And yesterday, Air France said it’s in talks to sell half of its catering unit Servair to HNA.