HNA Group has agreed to take a 13% stake in Virgin Australia Holdings, becoming its fourth major shareholder.
In a statement, Virgin Australia says its domestic and international business units have entered into a "heads of agreement" with HNA Aviation Group to form a “strategic commercial alliance”, which will accelerate the group’s access to the Chinese travel market. The agreement is understood to be non-binding.
In support of the alliance, HNA will subscribe to A$159 million ($114.7 million) worth of new shares, at an issue price of A$0.30 per share, a 7.1% premium to its last close on 30 May. This will give the group an approximate shareholding of 13%, although HNA intends to raise its stake to 19.99% over time.
HNA will also have a seat on Virgin's board.
Under the alliance, the companies will look to introduce direct flights between Australia and China, cooperate on codeshares, frequent flyer programmes, lounge access and promoting leisure and business travel.
“HNA is committed to expanding in the airline industry through strategic investments in companies with strong market positions and excellent management teams. We are excited to support the Virgin Australia Group through our investment and strategic alliance,” says HNA.
The share placement and strategic alliance are subject to regulatory approvals.
Air New Zealand announced in March that it was looking at a possible sale of all or part of its 26% stake in Virgin. Its chief executive Christopher Luxon also stepped down from Virgin’s board following the announcement. The Australian airline’s other shareholders are Singapore Airlines and Etihad Airways.