Virgin given the all clear on Tiger bid
The Australian Competition and Consumer Commission (ACCC) has announced it will not oppose Virgin Australia’s bid to take a 60 per cent stake in rival budget carrier Tiger Airways.
Virgin, the nation’s second largest domestic airline operator, will now inject $62.5 million into the Tiger business.
The ACCC’s Chair, Rod Sims, said the commission was satisfied the proposal would not represent a threat to competition in the market.
“The ACCC’s view is that this acquisition is unlikely to lead to a substantial lessening of competition in the Australian market for domestic air passenger transport services,” Mr Sims said.
Mr Sims said that Tiger’s financial history was a major factor in allowing the proposed acquisition to go ahead.
“In making this assessment the ACCC had particular regard to Tiger Australia’s history of poor financial and operational performance. In six years in Australia, Tiger has never made an operating profit, and its current losses are large. These losses remain a big drag on the entire Tiger group,” Mr Sims concluded.
Tiger’s CEO, Koay Peng Yen, said that the new venture will result in a stronger financial position for the company, and would see an improvement in operational management and procurement.
“We are delighted to receive the green light from the ACCC on this transaction. With this approval in place, we can now look forward to commencing discussions with Virgin on our plans to grow Tiger Australia, and enable it to compete more effectively in the Australia’s budget carrier space.” Mr Yen said.
Virgin’s Chief Executive Officer, John Borghetti, said that the company was pleased by the decision to approve the acquisition, which was first proposed in October last year.
“We are very pleased to receive clearance from the ACC for the proposed acquisition,” Mr Borghetti said.
“By partnering with Tiger Airways, we can use our local expertise to build a sustainable budget carrier, which will offer great value airfares and benefit jobs and tourism in Australia.”
The proposed acquisition is still subject to final regulatory approval from the Foreign Investment Review Board.