Air New Zealand has entered into an agreement to sell 19.98% of its stake in Virgin Australia to Chinese conglomerate Nanshan Group.
The Star Alliance carrier says in a stock exchange statement that it has agreed to sell the shares at A$0.33 ($0.24) each, equating to around A$232 million for the bloc. The sale will be completed approved by the Chinese authorities.
Privately-owned Nanshan operates a diverse range of businesses in China, and is the controlling shareholder in Qingdao Airlines.
“We believe Nanshan Group will be a very strong, positive and complimentary shareholder for Virgin Australia,” says Air NZ chairman Tony Carter. “The sale will allow Air New Zealand to focus on its own growth opportunities, while still continuing its long-standing alliance with Virgin Australia on the trans-Tasman network”.
Air NZ adds that it will consider options for its remaining 6% stake in the airline in due course.
In March the New Zealand carrier announced that it had engaged First NZ Capital and Credit Suisse to undertake a review of options for its 26% stake in Virgin, after declaring that it did not intend to hold a major minority position in the carrier. Air NZ chief Christopher Luxon also stepped down from Virgin’s board.
Nanshan will become the second Chinese investor in Virgin, after Hainan Airlines’ parent company HNA Group agreed to invest $159 million in May for a 13.3% stake in the Australian carrier. It will also gain a seat on Virgin’s board.
Virgin’s other major shareholders are Singapore Airlines (22%) and Etihad Airways (25%). Virgin Group also holds a 12.4% stake.
The Australian carrier is continuing on a capital review announced in March, as it works to shore up its finances following recent weak cash flows from its operations.