Qatar Airways announced plans to acquire a 25% stake in Virgin Australia from its private equity owner, Bain Capital, paving the way for the country's second-largest airline to expand its international operations and pose a stronger challenge to Qantas Airways (ASX:QAN).
The deal, subject to approval from the Foreign Investment Review Board, was struck for an undisclosed amount.
The FIRB's decision will test the Labor government, which previously denied Qatar Airways' request to increase services to major Australian cities.
Under the agreement, Virgin Australia will launch its long-haul routes to Europe using Qatar Airways aircraft, effectively bypassing the need for further government approvals for additional flights if the Australian Competition and Consumer Commission grants clearance.
Virgin Australia CEO Jayne Hrdlicka described Qatar’s involvement as the "missing piece" in the airline’s growth strategy, highlighting the increased scale and competitive edge it will bring to the airline’s operations.
The agreement marks a pivotal moment for Virgin Australia, which collapsed into administration at the onset of the COVID-19 pandemic.
Under Bain’s ownership, the airline has focused on domestic routes and a limited number of short-haul international flights.
The partnership with Qatar is expected to revive Virgin's long-haul ambitions and bolster its frequent flyer program, which has struggled to compete with Qantas’ dominant loyalty scheme.
Qatar Airways' CEO Badr Mohammed Al-Meer emphasised the benefits of increased competition in the Australian market, stating that the partnership would "bring even more value and choice" for consumers while supporting local jobs and businesses.
The deal comes at a turbulent time for the Australian aviation industry, with low-cost carrier Bonza and Regional Express (ASX:REX) ceasing operations this year.