Qatar Airways may buy Virgin Australia in full - what are the consequences?

[HS-TQE]

It’s happened before. The Government of New Zealand unilaterally controlled Ansett Australia (through AirNZ) in its final couple of years. I’m not sure how much the foreign investment approval process has changed since then though.

Air New Zealand was then owned by Brierley Investments with SQ holding a minor stake in NZ in Ansett's final years.

There was no NZ government involvement until they had to bail NZ out of trouble (which included taking a majority stake) from the Ansett fiasco.

From the Archives, 2001: The collapse of Ansett Australia

Twenty-years ago, in the dead of night, the axe fell on Ansett Australia. The airline that still carried the name of its pioneering founder, Sir Reginald Ansett, was grounded, with 16,000 Australian jobs lost.

www.theage.com.au

 

[Danger]

And we thought Qantas lobbied hard to prevent Qatar getting a few extra flights a week.

 

[justinbrett]

It’s happened before. The Government of New Zealand unilaterally controlled Ansett Australia (through AirNZ) in its final couple of years. I’m not sure how much the foreign investment approval process has changed since then though.

Nope. Air NZ was majority private when it owned Ansett. It was only renationalised after its collapse.

 

[PERLHR]

Ha. Love it. QR the new VA. Let VA come into One World and ditch Qantas to go to their bed chums Emirates. Good riddance. .,

 

[SYD]

QR buys VA, rolls VA into OW…. Not the first country to have more than one OW airline!

 

[burmans]

So many wild theories posing as analysis!

 

[TheInsider]

What's stopping QR buying out Velocity and then rebranding as Avios.
While another firm/airline buys out the airline.

 

[HS-TQE]

What's stopping QR buying out Velocity and then rebranding as Avios.
While another firm/airline buys out the airline.

Well I do remember one theory of ol SQ buying out Velocity (only) and integrating that in Krisflyer, considering Velocity was the most profitable part of the VA 1.0 group business.

 

[aus_flyer]

Given the government (admittedly, the previous one) was happy for Virgin to collapse into nothing, I think it'd be a bit rich to now get all high and mighty about a foreign owner.

 

[Must...Fly!]

What's stopping QR buying out Velocity and then rebranding as Avios.
While another firm/airline buys out the airline.

Bain. Why sell what should be the most profitable arm with (arguably) the most potential and be left with the airline only?

It would be a package deal. Or at least, one that occurs concurrently with another party, if they were to be split again. But I would put my money on the strategy being Velocity staying with the airline long term. Quite necessary if you are chasing a float.

 

[oz_mark]

It’s happened before. The Government of New Zealand unilaterally controlled Ansett Australia (through AirNZ) in its final couple of years. I’m not sure how much the foreign investment approval process has changed since then though.

Not sure about that, Air NZ was privatized in 1989, and returned to majority government ownership in 2021 subsequent to the Ansett collapse.

 

[justinbrett]

Given the government (admittedly, the previous one) was happy for Virgin to collapse into nothing, I think it'd be a bit rich to now get all high and mighty about a foreign owner.

There's a very big difference between foreign private owner and foreign state owner.

 

[elanshin]

QR as majority stakeholders - no will not get past Aus government.

Imagine this future world where Qatar (as a state country) decides it wants to bankrupt QF and attacks QF hard. VA tickets at dirt cheap a pop for a few years, QR prices are low. Suddenly QF literally can't survive because the opponent is a massively rich foreign state power. Rex is taken out in the crossfire. Hey guess what happens when that occurs.

Also I'm pretty sure QR won't be able to get VA into OW either since QF has veto power as a OW founder.

The best I can see is QR getting a minority stake. It'd be more likely someone else from the *A or skyteam that would be more likely to look at VA as an integration partner (that isn't SQ, EY or NZ).

Edit: thoguht I'd just clarify that the example i'm giving is an extreme one - but one that a rich a country is capable of pulling off. This would then mean the Aus Government will likely get dragged into this and becomes a proxy economic war. As a prudent measure the Aus government likely won't allow that possibility to happen if it can avoid it.

 

[HS-TQE]

^^ Agreed. QR being a 'cornerstone investor' in VA with 20% at most in a direct trade sale with Bain (per current regulations), with FIRB approval.

 

[jrfsp]

There's a very big difference between foreign private owner and foreign state owner.

Metro trains in MEL is majority owned by Hong Kong MTR which is essentially foreign state owned.

Port of Darwin is run by a Chinese company....

 

[justinbrett]

QR as majority stakeholders - no will not get past Aus government.

Imagine this future world where Qatar (as a state country) decides it wants to bankrupt QF and attacks QF hard. VA tickets at dirt cheap a pop for a few years, QR prices are low. Suddenly QF literally can't survive because the opponent is a massively rich foreign state power. Rex is taken out in the crossfire. Hey guess what happens when that occurs.

Also I'm pretty sure QR won't be able to get VA into OW either since QF has veto power as a OW founder.

The best I can see is QR getting a minority stake. It'd be more likely someone else from the *A or skyteam that would be more likely to look at VA as an integration partner (that isn't SQ, EY or NZ).

Edit: thoguht I'd just clarify that the example i'm giving is an extreme one - but one that a rich a country is capable of pulling off. This would then mean the Aus Government will likely get dragged into this and becomes a proxy economic war. As a prudent measure the Aus government likely won't allow that possibility to happen if it can avoid it.

It's even more serious than that.

Imagine a situation where the Australian and Qatari governments are having a foreign policy dispute (unrelated to aviation)

Qatar has the power to ground VA and bring the country to a standstill in retaliation
Australia wants to put financial sanctions on Qatar but can't, or otherwise the above happens

Just one example of the many bad outcomes that could occur if this is allowed. This is why the FIRB exists.

 

[justinbrett]

Port of Darwin is run by a Chinese company....

And I think most people accept that was a huge mistake

Metro trains in MEL is majority owned by Hong Kong MTR which is essentially foreign state owned.

Not to say nothing can be state owned (DNATA is owned by UAE). It's a risk v reward situation.

I believe Metro trains operate under a licence from the VIC government that could easily be revoked, and it does not have exclusive control over the city public transport.

 

[SeaWolf]

Qatar taking over Virgin is even less likely than Virgin joining Star Alliance.

Putting that aside it wouldn't surprise me if the ongoing bad blood that Qantas has with Qatar (and several other alliance members) results in Qantas exiting Oneworld at some point, even without Qatar buying a stake in Virgin. Its been obvious for a while that Qantas is not a team player in Oneworld.

 

[clarkkent]

What's worse, a foreign government owning an airline here, or a foreign government owning a major telco? (Singapore, Optus.) Or is there just a particular issue with Qatar...?

 

[jrfsp]

QR own 25% of IAG (BA, EI, IB), making it the largest shareholder - yet didnt cause mass panic over there.