Qatar Airways Nears Completion of its Investment in Virgin Australia


Qatar Airways is nearing the completion of an agreement to acquire a minority interest in Virgin Australia, nearly 18 months after its private equity owner, Bain Capital, postponed a billion-dollar initial public offering and shifted focus to attracting strategic investors.

According to sources, Qatar is just days away from finalizing the deal, which will be contingent upon approval from the Foreign Investment Review Board. The discussions were initially reported by The Australian Financial Review in June.

Despite previous tensions between the Labor government and Qatar, particularly regarding the airline’s requests for additional flights into Australia, it is likely that the government would reconsider blocking this deal unless the FIRB presents compelling reasons to do so.

The recent collapses of Bonza and Regional Express have reduced competition for the dominant player, Qantas. The government’s refusal to grant Qatar additional flights has drawn criticism for seemingly prioritizing Qantas’ profitability, especially with an election approaching.

If the agreement is signed as anticipated, it could significantly alter the dynamics of Australia’s aviation sector and potentially challenge Qantas’ dominance on domestic routes.

At the conclusion of March, Qantas and its low-cost subsidiary Jetstar commanded a 61.8 percent share of the domestic passenger market, surpassing Virgin’s 31.3 percent, which may increase with Qatar as a strategic partner. In the realm of international travel, Qatar is poised to acquire a stake in Virgin at a time when other international airlines, such as Emirates and Singapore Airlines, are ramping up their flight capacities in response to the resurgence in demand following the COVID-19 pandemic.

Bain Capital, which acquired Virgin during its administration in 2020 at the onset of the pandemic, is anticipated to benefit financially from the Qatar agreement while retaining majority ownership of the airline.

The prominent US private equity firm, under the leadership of Michael Murphy locally, previously engaged Goldman Sachs, Barrenjoey, and UBS to conduct a non-deal roadshow early last year but ultimately decided against proceeding with the proposed public offering. Senior executives, including CEO Jayne Hrdlicka and Chief Development Officer David Marr, who participated in the IPO discussions, are either leaving or have already departed from the company.

For the six months ending December 31, Virgin reported revenues of $2.8 billion, an increase from $2.5 billion during the same timeframe the previous year. The airline posted a profit of $129 million for the 2023 financial year, as indicated in the accounts submitted to the corporate regulator.