Virgin gets green light for Tiger purchase
Virgin Australia has been given the go-ahead to purchase a 60% stake in Tiger Airways’ Australian unit.
Australia’s competition regular, the ACCC, approved the tie-up this week, enabling Sir Richard Branson’s Virgin group to extend its reach in Australia’s aviation sector. Earlier this month the airline completed the acquisition of 100% of Perth-based Skywest Airlines.
For Tiger, the deal will enable it to expand its footprint in the Australian market. Both Tiger and Virgin have committed to invest up to a further AU$62.5 million (US$64.2m) in the business to fund its future expansion plans, which include increasing Tiger Australia’s fleet size to 23 aircraft by 31 March 2018, with the potential to rise to 35 aircraft.
Following the deal, Tiger Australia will be managed as a standalone entity, with a separate board and management team.
“We are delighted to receive the green light from the ACCC on this transaction. With this approval in place, we can now look forward to commencing discussions with Virgin on our plans to grow Tiger Australia, and enable it to compete more effectively in the Australia’s budget carrier space,” said Koay Peng Yen, Tiger’s Group CEO.
Tiger Australia will pay an annual licence fee to its Singapore-based parent company, Tiger Airways, for the use of the Tiger brand for 20 years, with options to renew for another two periods of five years each. It has also agreed to make a payment of AU$5m to Tiger Airways, if Tiger Australia achieves certain financial targets.
The transaction is expected to be completed in the second half of 2013.