VIRGIN BLUE GROUP ANNOUNCES MAJOR NEW PARTNERSHIP WITH ETIHAD

Virgin Blue Holdings Limited (ASX: VBA) and Etihad Airways PJSC today signed an agreement establishing a commercial partnership that will enable Virgin Blue's international arm, V Australia, to launch direct services to Abu Dhabi in 2011 and the two airlines offer a joint network of more than 100 destinations from October 1, 2010.

Together, Etihad and V Australia will move towards a total of 27 weekly services between Abu Dhabi and Australia - including double-daily services between Abu Dhabi and Sydney, daily Melbourne-Abu Dhabi flights and six frequencies per week between Abu Dhabi and Brisbane.

V Australia will operate three Sydney-Abu Dhabi services per week from February 2011 and three Brisbane-Abu Dhabi services per week by February 2012, using its new fleet of three-class Boeing 777-300ER and becoming the first Australian carrier to operate to the Middle East since 1991.

From October, Virgin Blue Group customers can access Etihad's network of 65 destinations across North America, Europe, Asia, the Middle East and the Indian Subcontinent. All Virgin Blue services will be available to Etihad customers, opening up 44 destinations in Australia, New Zealand and the Pacific Islands, and to Asia and Los Angeles.

The agreement integrates the Etihad Guest and Velocity frequent flyer programs, allowing members to earn status/tier points and frequent flyer points immediately along with reciprocal service benefits and lounge access for top tier members of both programs. The ability for members to burn miles on both carriers' services comes into effect from October 1.

The Chief Executive Officer of the Virgin Blue Group of Airlines, Mr John Borghetti, said the alliance with Etihad allowed it to redefine its long-haul operation and unlock a genuine global network that would be particularly attractive to Virgin Blue's business and international leisure travellers.

"Everybody wins from this partnership. It increases competition, choice and convenience for the travelling public. Etihad will gain access to the valuable domestic feed in Australia and the Virgin Blue Group will gain east bound access to an extensive international network serving multiple destinations across the Middle East, the UK, Europe, Africa and Asia.

"This is a real game changer and positions us as a truly global player. Just as Virgin changed the game in domestic travel ten years ago and last year made huge impacts on the Pacific route, this agreement will bring real benefits for the travelling public.

"With the impending launch of our product enhancements across the group, Virgin Blue and Etihad are ideally suited as airline partners."

Mr Borghetti said: "We expect the strategic alliance to have significant revenue and profit upside for both carriers. Importantly, each business will immediately gain from reciprocal traffic flow."

Etihad Airways' Chief Executive Officer, Mr James Hogan, said the partnership would grow to become one of the Gulf carrier's most significant.

"We are excited to facilitate the entry of V Australia into Abu Dhabi as the first Australian airline to fly to the United Arab Emirates.

"Australia is a critically important market for Etihad and we are very pleased to be able to provide more capacity on our Australian routes through this partnership," he said.

Mr Hogan said that by partnering across global and regional routes, Etihad and Virgin Blue Group could offer a comprehensive network to customers while realising significant, complementary benefits for the two airlines.

"With our combined route network, we will provide all-important access from Australia to both the USA and Europe, which improves our suitability for both business and leisure travel and puts us right in the race for major corporate travel accounts," he said.

"Virgin Blue is fundamentally reshaping itself and, much like Etihad, they have made huge strides in a short space of time. We know there are huge opportunities in working together very closely in this market."

Under the agreement, the two airlines will explore further avenues of cooperation, and will lodge an application for authorisation with the Australian Competition and Consumer Commission to allow them to cooperate across a broad range of commercial functions. It is only with this further cooperation that the airlines will be able to offer the full program of benefits the partnership will bring.