Posted on: 20 October 2014 by Ross McSweeny
Virgin Australia has announced plans to secure 100% ownership of Tigerair Australia, completing the takeover with the purchase of the remaining 40% of Tigerair Australia shares for A$1, by the end of 2014.
Full control of the airline will give Virgin Australia the brand rights to fly Tigerair Australia to a number of short-haul international destinations.
“This proposed transaction marks an important milestone for Tigerair Australia and forms part of the Virgin Australia Group’s Virgin Vision strategy to 2017,” commented John Borghetti, Virgin Australia’s CEO. “Given the ongoing subdued consumer demand in the Australian domestic market, the growth of the Tigerair Australia domestic fleet is likely to be reduced. Under this proposed transaction, we will benefit from the economies of scale and achieve profitability ahead of schedule by the end of 2016.”
Borghetti explained that so far, the joint venture has strengthened systems and processes, increased aircraft utilisation, established a Brisbane base and built on synergies across a range of areas and that the company intends to retain Tigerair Australia’s low-fares philosophy.
It is expected that Virgin Australia will consolidate Tigerair Australia’s financial results going forward as result of the transaction.