Virgin Australia buys majority interest in Tiger Australia

[Andrew P]

my twitter account running hot on this deal

more to come, see ASX for announcement

[Bernie P]

VIRGIN Australia has bought a 60 per cent stake in low cost carrier Tiger Airways Australia for $35 million.

The deal will allow Tiger to expand its capacity in Australia and offer more attractive offers to customers, Tiger said.

Tiger and Virgin said they would spend up to $62.5 million on Tiger Australia to increase its fleet from 11 aircraft to 35 by 2018.

Tiger will continue to use the Tiger brand for at least another 20 years.

Tiger Airways chief executive Koay Peng Yen said the deal with Virgin was a significant step forward for the company.

"The joint venture will bring about a stronger and more competitive Tiger Australia, and allow us to deploy more capacity and attractive budget offerings to our customers," he said in a statement.

Virgin chief executive John Borghetti said the deal would give his airline greater access to the budget market.

"By partnering with Tiger Airways, we can use our expertise to leverage Tiger Australia's competitive cost base and build a sustainable budget carrier," he said in a statement.


Read more: http://www.news.com.au/business/breaking-news/virgin-teams-up-with-tiger/story-e6frfkur-1226506374339#ixzz2AjEwFLHA

[Chris W]

And Singapore buys 10% of Virgin.

[Jarden S]

So whats the ownership mix of Virgin Holdings now:
10% SIA
10% Etihad
20% ANZ
30% SRB or does he own more?
30% other investors

[Grahame Hutchison]

Singapore's 10% purchase gives Virgin Australia A$105.3mio to buy 60% of Tiger for only $A$35mio - nice deal.

[Thomas Collins]

The deal will allow Tiger to expand its capacity in Australia and offer more attractive offers to customers, Tiger said.

So Tiger's owners won't invest and grow the business because it is an under performer, but Virgin will...

[Lukas M]

So does this give Tiger Australia access to the International market now if approved?

[JamesL]

Yes.

[Thomas Collins]

It is all really quite straight-forward; Virgin's strategy isn't working, so they had to purchase a controlling stake in Tiger, and Tiger's business isn't successful, otherwise they would not need someone to take them over...

[Andi O]

Nothing is ever straight forward in the airline industry!

[Rowan McKeever]

Pretty sure "Virgin's strategy isn't working" was dispelled at the AGM last week. As far as I can tell Virgin's strategy has worked quite well & the Tiger acquisition could be seen as a more sensible approach to the long-standing 'Virgin Lite' concept...

[JamesL]

Thomas you've posted the same response twice in different forums, if the VA strategy wasn't working they wouldn't of posted a profit unlike QFA who posted a loss...

[Ash W]

James, not saying Thomas is right, BUT in business a "profit" isn't actually the ultimate sign of how well or how poorly a business is doing.

You mentioned Qantas and their loss this year, but that loss was actually a statutory loss rather than an actual loss. They actually made a profit before tax of $95m on revenue of $15.7bwas compared to Virgin's $22.8 on revenue of $3.9b. Oddly do the sums and you will see each made roughly the same percentage of profit based on revenue.

Likewise the year before their profit included a one off payment of $100m odd from Rolls.

So as mentioned profit is not the best indicator.

[Montague S]

word on the street is that Virgin want's a 60% slice of the Tiger. So, it's looking to pitch Tiger vs Jq and VA vs QF.

interesting times.

[Mick F]

G'day Monty,
I think the ACCC decision on this was due at the end of January. Virgin and Tiger announced this first back in November. So hopefully it's gone through and Tiger can look at plans for expansion.

Cheers

Mick

[Montague S]

thanks Floody,

just caught a snippet on Sunrise and the decision is imminent as you said.

http://www.theage.com.au/travel/blogs/travellers-check/the-end-of-cheap-airfares-in-australia-20130204-2dtiw.html

[Rowan McKeever]

Sunrise were saying the ACCC decision is due Thursday... for what that's worth, given the same show was saying this would restructure the industry by having TT take on JQ and VA take on QF, as if that hasn't been happening for some time already!?

[MarkR]

James, not saying Thomas is right, BUT in business a "profit" isn't actually the ultimate sign of how well or how poorly a business is doing.

You mentioned Qantas and their loss this year, but that loss was actually a statutory loss rather than an actual loss. They actually made a profit before tax of $95m on revenue of $15.7bwas compared to Virgin's $22.8 on revenue of $3.9b. Oddly do the sums and you will see each made roughly the same percentage of profit based on revenue.

Likewise the year before their profit included a one off payment of $100m odd from Rolls.

So as mentioned profit is not the best indicator.

Profit is a great indicator if your a shareholder or financier, in the case of Virgin they are also trending well on other stats including RPKs and ASKs as well as yield, and of course in raw numbers they passed Qantas mainline in passengers carried some time ago.

[JamesL]

The Decision is on Thursday, the ACCC has shown some concerns over this due to the fact with the buyout of XR and the controlling majority of TT that it would return the market to a duopoly. It does mean that TT will get a great boost of cashflow and will see the fleet grow significantly.

The decision should pass after a precedent of the QF/EK deal. If the deal does not go through then the future for TT is bleak and could turn them into another page of Australia's aviation history.

My job hangs in the balance on this...

[Grahame Hutchison]

Virgin Australia's takeover of Tiger in trouble (http://centreforaviation.com/analysis/virgin-australias-takeover-of-tiger-australia-hits-a-snag-ceo-john-borghetti-ready-to-compromise-101177)

[Craig.D]

Interesting . I just spotted this in brisbane Tiger VH -VNJ with no Aussie flag.

[Lukas M]

They all have flags on the other side only

[Paul f.]

They all have flags on the other side onlyWhat about VH-VNQ

[Craig.D]

They have the flag on one side only and the picture i took is the side the flag is on.I see them every day.

[Craig.D]

Here you go have a look at these two you will see .pic 1 VNG pic 2 VNB Flag on oned side only.I see them every day.

[JamesL]

VNJ has been repainted, I will have a look when I go to work later... they may have forgotten to repaint it?

[Craig.D]

Thanks but why did they repaint it and have they painted others.

[JamesL]

Apparently a mistake whilst it was in SIN, will have it re-added on Thursday...

[JamesL]

It seems when each aircraft go to SIN they are getting repainted after their C checks...

[JamesL]

http://www.accc.gov.au/media-release/accc-to-not-oppose-virgin-australia%E2%80%99s-proposed-acquisition-of-60-of-tiger-australia

[Rob R]

Green light given today.

http://www.brisbanetimes.com.au/business/accc-gives-green-light-to-virgintiger-deal-20130423-2ibge.html

[Andrew M]

Based on the fact that it if was not approved Tiger would pull out of the market.

All they will do is raise prices and slowly take over some VA routes to enable VA to cut costs

Sounds like Qantas/Jetstar all over again