Etihad receives approval to increase stake in Virgin Australia’s domestic unit

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Etihad Airways has welcomed Australia's decision to allow it to increase its stake in Virgin Australia Holdings (VAH), the domestic arm of Virgin Australia, to 10%.

The United Arab Emirates carrier already has a 4.99% stake in VAH. It accumulated 3.96% in the open market during late May 2012, followed by a purchase of 1.03% in early June.

Etihad says it had applied to Australia's Foreign Investment Review Board to raise the stake size it is allowed to obtain.

The two carriers already collaborate in code-sharing, joint marketing and "reciprocal earn-and-burn" on their frequent flyer programmes. The pair operate 24 services weekly between Australia and Etihad's base in Abu Dhabi.

"The strategic partnership has already delivered significant revenues to each airline," Etihad said in a statement. "It is expected that the equity stake in Virgin Australia will lead to further revenue generating opportunities."