Virgin Australia invests in Tiger, scoops up Skywest and sells shares to SIA.

Virgin Australia’s strategy to become the airline of choice in all markets has taken a leap, with the acquisition of a 60 percent stake in Tiger Australia and the placement of a ten percent share in Virgin to Singapore Airlines.

The airline also reached an in-principle agreement to purchase 100 percent of Skywest Airlines and invested AU$35 million in its share purchase agreement for 60 percent of Tiger Australia.

With a commitment to invest up to a further AU$62.5 million, Virgin Australia and Tiger Airways joint venture has the potential to grow Tiger Australia’s fleet from 11 aircraft up to 35 by 2018.

In addition, Tiger Australia has agreed to pay Tiger Airways AU$5 million if certain financial targets are met over the next five years.

Virgin’s interest in Tiger Australia is subject to regulatory approval from the ACCC and FIRB.

Singapore Airlines received over 245 million shares of Virgin Australia at a cost of AU$105 million, with anti-dilution rights in the event of an equity issuance from other transactions.

The placement to Singapore Airlines has received approval under Australia’s foreign investment policy.

“Singapore Airlines fully supports the ongoing transformation at Virgin Australia, which has already resulted in a more competitive aviation market in Australia,” Singapore Airlines chief executive Goh Choon Pong said.

Skywest Airlines will be re-branded as Virgin Australia, while Tiger Australia will remain a separate business.

Virgin Australia chief executive John Borghetti said the transactions would diversify earnings and drive future growth opportunities.

“The acquisition of Tiger Australia and Skywest provides Virgin Australia with a strong presence in the budget, fly-in fly-out and regional markets, enabling us to fast-track our expansion in these areas and become a stronger competitor,” Mr Borghetti said.

“Domestic passenger numbers have grown almost 25 per cent in the last five years and the transactions announced today will ensure that Virgin Australia can deliver a diverse and competitive range of services,” Tourism & Transport Forum chief executive John Lee said.