Qatar Airways Investment In Virgin Australia Opens Door To Wet Leasing

Qatar Airways has confirmed its intention to purchase a minority stake in Virgin Australia, and the deal may also allow Virgin to return to long-haul flying with wet-leased aircraft.

Virgin announced on Oct. 1 that Qatar aims to acquire a 25% stake in the Australian airline from owner Bain Capital. The pair are already strategic partners, and the stake would lead them to strengthen their relationship, the carriers said. The Qatar Airways interest has been previously reported.

The deal must still be approved by Australia’s Foreign Investment Review Board. “We do not take [regulatory approval] for granted and have made submissions outlining the benefits of the transaction for Australian aviation, Australian travelers and the Australian economy,” said Virgin Atlantic CEO Jayne Hrdlicka.

The investment by Qatar Airways “will unlock new areas of cooperation,” Virgin said. This includes Virgin’s plan to wet-lease widebody aircraft, presumably from Qatar Airways, to operate flights to Doha. Virgin intends to launch these flights from Brisbane, Melbourne, Perth and Sydney from mid-2025.

Virgin declined to comment further about whether these aircraft will come directly from Qatar Airways, or how many and what types would be included. The move will allow a broader range of codeshare connections beyond Doha. However, the wet-lease arrangement will require approval from the Australian Competition and Consumer Commission.

Virgin hinted that the move could be a step toward adding its own widebody aircraft. The wet-lease operations will enable it “to assess the longer-term merits and viability of widebody aircraft flying while providing Australians with greater local competition for their long-haul travel needs in the near-term,” Virgin said. Hrdlicka added that the deal “allows us to put our toe in the water regarding long-haul international [flights].”

Qatar Airways already operates flights from Doha to the four largest Australian cities, in addition to Adelaide. However, it is constrained from adding more of its own flights to the four major cities due to frequency limits under the existing bilateral air services agreement.

Virgin operated Airbus A330 and Boeing 777 widebodies before the pandemic, but it phased out these aircraft during its restructuring process. Since then it has focused on domestic and limited short-haul international operations using an all-narrowbody fleet.

Bain Capital acquired Virgin Australia in 2020 following the airline’s entry into voluntary administration. Bain has previously indicated that its goal was to launch an initial public offering (IPO) to sell shares in Virgin.

The IPO still appears to be part of Bain’s strategy following the Qatar Airways deal. Qatar’s minority stake “serves as a cornerstone investment ahead of an anticipated return of Virgin Australia into public ownership and the opportunity that would provide for Australians to share in Virgin Australia’s future,” Virgin said.

Virgin Australia had multiple foreign owners before its bankruptcy and restructuring. These included Etihad Airways, Singapore Airlines, the U.K.-based Virgin Group and China’s HNA Group. Air New Zealand had previously held a stake in Virgin Australia.