SYDNEY (Reuters) -The Australian government on Thursday approved Qatar Airways’ move to buy a 25% stake in Virgin Australia from U.S. private equity firm Bain Capital saying the deal would deliver more international flights and support jobs.
Qatar Airways in October proposed to buy the minority stake for an undisclosed amount after the federal government in 2023 denied the Middle Eastern carrier’s requests to fly additional services into Sydney, Melbourne, Brisbane and Perth.
Treasurer Jim Chalmers said the deal is expected to boost competition in the aviation sector and follows extensive talks by the government with industry, unions and other stakeholders.
“My decision aligns with the advice of the Foreign Investment Review Board (FIRB) that this proposal is consistent with the national interest,” Chalmers said in a statement.
“On the advice of FIRB, I have approved this proposal subject to legally enforceable conditions that ensure Australian representation on Virgin’s board and protection of its customer data.”
Australia’s treasurer has the power to cancel any foreign investments if it is deemed to pose a national security risk.
The treasurer’s approval comes a week after Australia’s competition watchdog backed the planned alliance between Virgin Australia and Qatar Airways, saying it would provide air travellers with improved services and products.
The alliance will lead to 28 new weekly return services between Doha and Perth, Brisbane, Sydney and Melbourne.
Virgin, Qatar Airways and Bain Capital welcomed the government approval in a joint statement.
“Being backed by one of the world’s largest airlines now gives us the scale and access to industry expertise, which will support continued growth in line with the market domestically, improve our ability to compete for key segments of the market and add momentum to our margin ambitions,” Virgin Australia CEO Jayne Hrdlicka said.
Virgin said its long-haul flights to Doha will commence from June, subject to final regulatory approvals.
Bain Capital continues to hold a majority stake in Virgin, for which it was targeting an A$1 billion listing before the plans were delayed.
Virgin is the biggest domestic competitor to Qantas Airways, which has a rival international flying partnership with Dubai-based Emirates.
Qantas did not immediately respond to a request for comment.
(Reporting by Renju Jose in Sydney and Sameer Manekar in Bengaluru; Editing by Alan Barona and Marguerita Choy)
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