Singapore Airlines and Etihad are expected to place greater urgency on raising their stakes in Virgin Australia to as much as 20 per cent each to bolster their influence in the Australian market.
The renewed speculation about a shuffle of Virgin's share register follows Singapore Airlines confirming it is in talks about selling part or all of its 49 per cent stake in British airline Virgin Atlantic to the largest US carrier, Delta.
Singapore Airlines has been seeking to sell the stake for years, allowing it to place greater focus on its immediate interests in the Asia-Pacific region.
Singapore Airlines gained a 10 per cent stake in Virgin Australia last month, and insiders say it is likely to raise its holding further as it jostles with Etihad and Air New Zealand for influence. All three airlines also have strategic alliances with Australia's second-largest airline.
"Singapore have always been looking for a stranglehold in this market. [A larger stake in Virgin] might be a path to that," an airline executive said.
The prospect of three airlines with stakes of almost 20 per cent each will present a major challenge for Virgin in managing their competing interests.
The most likely flashpoint is an overlap between Singapore Airlines and Etihad on code-share flights with Virgin between Australia and Europe.
So far, Virgin Australia has resisted giving either of the three airlines seats on its board, in order to avoid what one airline executive said would be a "shambolic situation".
"But Virgin is going to have to invest a lot more time in managing these [airline shareholders] because there are no representatives at board level," the executive said. "This delicate balancing act is going to be a full-time job."
Sir Richard Branson's Virgin Group has two seats on the Australian airline's board.
The English entrepreneur is considered unlikely to sell his entire stake of about 23 per cent in Virgin Australia unless a buyer is willing to pay a hefty premium to the share price of 44c.
After a turbulent few years, he stands to make gains from his investment in Virgin as it reshapes itself as an upmarket competitor to Qantas.
While there have been suggestions Singapore Airlines could buy part of Sir Richard's stake, insiders say a more likely scenario is a purchase of Virgin shares on-market. Singapore Airlines can buy only another 9.99 per cent of Virgin without having to launch a full takeover offer.
A Singapore Airlines spokesman said it was "comfortable with the 10 per cent [stake] at this stage".
Etihad has made it clear that it wants to build a larger stake in Virgin. It has to reapply to the Foreign Investment Review Board each time it wants to raise its stake by another 5 percentage points.
Delta's talks about buying Singapore Airline's cornerstone stake in Virgin Atlantic also triggered speculation it might have an interest in investing in Virgin Australia.
Although it has a code-share alliance with Virgin Australia on the US-Australia route, three people close to the airlines said they did not believe Delta was likely to be interested in buying an equity stake because the Australian market represented just a tiny part of its global network.
Delta has just one flight a day between the US and Australia.
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