Air NZ stands by Virgin Australia
Virgin Australia Holdings's largest shareholder, Air New Zealand, remains "fully supportive" of the Australian carrier's strategy after it revealed it would report a half-year pre-tax loss of around A$49 million ($53 million).
Virgin shares rebounded 8 per cent to A34¢ ($0.37) despite the airline disclosing it would report the steep loss, after having traded as low as A28¢ on Wednesday.
Air NZ has a 24.46 per cent stake in Virgin after sub-underwriting a A$350m capital raising alongside Singapore Airlines and Etihad Airways.
But the Kiwi carrier has Foreign Investment Review Board and competition approval to boost its stake to 25.9 per cent under "creeping" provisions. Deutsche Bank, which has previously handled Air NZ's purchases, was the most active broker in Virgin shares on Wednesday and Thursday.
An Air NZ spokeswoman would not say whether the airline had taken advantage of the recent dip in the Virgin share price to increase its grip on the Australian airline.
"We have obligations to disclose when we move by more than 1 per cent from our last disclosed position and we will obviously comply with those," she said.
"We are fully supportive of Virgin Australia and its strategy and confident that [chief executive] John Borghetti and his team will continue to attract more share of the travel wallet of both business and leisure customers."
CIMB analyst Mark Williams said he would not be surprised if Air NZ was boosting its stake given it had shown a willingness to do so previously.
Singapore Airlines and Etihad do not yet have FIRB approval to increase their stakes in Virgin beyond 19.9 per cent. All three airlines have been offered seats on the Virgin board.
Air NZ has confirmed chief executive, Christopher Luxon, will take up the seat and Etihad boss James Hogan will do the same.
Singapore Airlines has yet to reveal whether its chief executive Goh Choon Pong or another representative will sit on the Virgin board. Singapore Airlines last month named former cargo executive Tan Tiow Kor as its new Sydney-based head of its Southwest Pacific region from February 17.
All three of Virgin's airline shareholders are major competitors of Qantas Airways. Virgin and Qantas are expected to be unprofitable this year due to high capacity in a weak market.
Virgin had not provided any guidance to the market for its first-half profits until it received a query from the Australian Securities Exchange following a steep decline in its share price.
The airline said it would report a half-year pre-tax loss "materially in line" with the most recent broker consensus of A$49m.
The figure does not include losses from its majority stake in Tigerair Australia, which could add up to about A$19m during the half, based on results put out by its Singapore-based joint venture partner.
It will also not include other one-off costs.
Qantas, which is about four times the size of Virgin, is expected to report a half-year pre-tax loss of A$250m to A$300m.