ACCC approves Virgin's Tiger takeover

Broadcast: 28/04/2013

ALAN KOHLER, PRESENTER: Big week for the number two airline carrier, Virgin Australia. It got the go-ahead from the ACCC to take a 60 per cent stake in Tiger Airways, the budget airline. And there was a fair bit of movement on its share price, share register just afterwards. Richard Branson's Virgin Group sold about a 10 per cent stake to Singapore Airways. Air New Zealand also put out a statement saying its stake was just below 20 per cent the takeover threshold and the ball may now be in Etihad's court, which has about 10 per cent, as you can see there. So I'll wonder if they'll just buy Richard Branson out now and end up with 20 per cent so Virgin becomes a sort of a three-way partnership between Etihad, Singapore and New Zealand.

ADELE FERGUSON, COMMENTATOR: Yeah, it's an interesting play. And there's a lot of talk that Branson needs the money for his bank in the UK, so that he will sell out his stake. Whether it'll be to Etihad, that will be an interesting one. I guess Etihad needs them, but Virgin doesn't need Etihad as much as Etihad needs Virgin.

IVOR RIES, SENIOR RESEARCH ANALYST, WILSON HTM: If you look at all the shareholders on the register, they all need Virgin for the same reason is the feeder traffic. New Zealand needs to be able to feed its people into the Australian market, Singapore needs feeder traffic through its hub and Etihad's the same. So they've all got similar but partly competing interests, and really they could just turn it into a three-way joint venture and get it all over and done with.

ALAN KOHLER: How do you think John Borghetti's going in his big project of taking on Qantas with Virgin?

ADELE FERGUSON: I think he's doing really well. He's really setting the company up to compete with Qantas, which Qantas hasn't really had for a very long time. So you've now got Tiger can go head-to-head with Jetstar, which leaves Virgin to lift its game and go head-to-head with Qantas.

PETER MORGAN, INVESTOR: Particularly in the domestic market here in Australia, which has a been a cash cow for Qantas and is now just gonna become a duopoly for both players for hopefully - John Hess today, a rational operator in terms of what he's tried to do with the company. But, i mean, again, you look at Virgin's share price and I can remember when Virgin first came to the market; it was $2.20 or $2.40 a share when it came to the market and today we're talking about a share price that's down to 50 cents or struggling to make 50 cents in that period of time.

ALAN KOHLER: Warren Buffett said if he ever gets the urge to buy an airline, he ...

IVOR RIES: Here's a 1800 number to ring. And he says, "Hi, my name's Warren. I'm an air-coholic." And they talk him out of buying it.

PETER MORGAN: Yeah, but hold, you say that - Buffett says that, but he's also in that private jet company in the States that he's backed himself.

IVOR RIES: I think there might be a few fringe benefits in that.

ALAN KOHLER: He's also buying a lot of newspapers which seem to be airlines as well, but, anyway.