Virgin Australia has just released a statement, after Qantas boss Alan Joyce wrote to the PM, complaining about its capital raising — funded by overseas airlines.
The last line is the most telling: “The landscape of Australian aviation has changed forever. It is no longer a monopoly.”
Joyce is worried the cash injection will help Virgin undercut its domestic operations to the point where it will find it difficult to fund its international arm.
Virgin is raising $350 million through a capital raising, at 38 cents per share. Major shareholders Air New Zealand, Etihad and Singapore Airlines will be offered board seats.
Here’s the full statement:
Since 2010, Virgin Australia has been focused on a five-year strategy to bring competition to all sectors of the Australian aviation market and build a resilient business that can deliver sustainable performance for the long-term.
In that time, Australia has benefited greatly. We have grown our workforce from 6,400 to more than 9,500, creating more than 3,000 Australian jobs and adding thousands more in contractor roles, we have increased our aircraft numbers from 87 to 144, we have established a strong presence in the corporate, regional and budget market segments, lowering airfares in these areas, we have transformed the customer experience for domestic travel and, importantly, we have forged innovative alliance partnerships with four of the world’s best airlines increasing Australia’s visibility in more than 460 destinations worldwide.
All of this is good for the Australian economy.
Up until recently, Australia’s corporate travel market was a monopoly for over a decade and Australian business travellers and the economy have suffered as a result of the lack of competition.
Virgin Australia’s capacity increases since 2010 have been limited to routes that have been in need of further competition and frequencies, such as trans-continental routes and important regional routes throughout Australia. In fact, during the 2013 Financial Year, we added less than half of the capacity that our major competitor added to the market.
The capital raising announced on 14 November 2013 is designed to enhance Virgin Australia’s liquidity and gearing position to ensure we are in a stronger position moving forward, so that we can continue to bring much needed competition to the Australian aviation market and continue to grow jobs in Australia.
It is important to note that should all Virgin Australia’s three major airline shareholders have board representation, we will still continue to have a majority independent board with an independent chairman and appropriate protocols in place which will ensure good management and strong corporate governance.
We know we have chosen the right partners with the right intentions. They are all aligned in the common goal of wanting Virgin Australia to provide strong competition in the Australian aviation market.
The landscape of Australian aviation has changed forever. It is no longer a monopoly.